Trump Family Memecoins Crash as Sell-Off Begins

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What to know:

  • The combined market cap of the TRUMP and MELANIA memecoins has slumped 56% to $10.9 billion in the past 24 hours.
  • Data shows that the rise in both memecoins correlated with a capital flight out of existing memes like DOGE, SHIB, PEPE and POPCAT.
  • Scam hunting YouTuber Coffeezilla voiced concerns about both projects.

The pre-inauguration festivities for President-elect Donald Trump commenced over the weekend with the debut of memecoins TRUMP and MELANIA, which sparked such interest that their collective market value peaked at over $17 billion, eclipsing the worth of Shiba Inu (SHIB) and Avalanche blockchain’s AVAX.

One could wonder where investors managed to gather such funds while bitcoin (BTC) hovered near another record peak. However, it turns out they didn’t. The money fueling the price surge of Trump’s token was actually shifted from popular meme-coins that have sustained the crypto market during the past year.

As a researcher, I’ve noticed an intriguing trend where some investors have reportedly become millionaires seemingly overnight. However, a cautionary note must be made for those investing in memecoins – these are tokens that lack any inherent utility and whose value is solely dependent on market demand. Since their price is influenced by popularity, they could suffer significant losses when the next hyped coin captures attention.

In a YouTube video, Coffeezilla, a well-known investigator of scams, stated, “It’s clear that this is a sham, it won’t last another four years, and there’s nothing of worth to be found here.

Upon the release of TRUMP over the weekend, I started to see a mass departure from digital currencies such as Dogecoin (DOGE), Shiba Inu, Pepe (PEPE), and Popcat (POPCAT).

Since President Trump’s launch, POPCAT has experienced a 42% drop in market value, while SHIB and DOGE have both decreased by 15%. PEPE is down by 22%. Combined, these four tokens have seen a market cap loss of approximately $13.5 billion. This figure doesn’t account for the double-digit declines experienced by WIF, BONK, and hundreds of other memecoins as well.

Trump’s value suffered a significant blow when Melania was released into circulation, plummeting by 58% and underscoring the unpredictable behavior of speculative meme-tokens. Currently, their combined worth stands at approximately $11 billion, with a staggering $6.3 billion vanishing over the past day.

The market value of cryptocurrency tokens is calculated by multiplying their circulating supply with their current price. However, not all of this supply can be quickly sold due to varying levels of liquidity, which means the actual market value could be less than what appears on paper. Nevertheless, if we see a decrease in the market value of one meme coin and an increase in another, it shows that investors are shifting their money from one token to another, or in other words, reallocating capital.

As an analyst, I find myself cautioning those who have recently invested in these digital tokens, often drawn by tales of rapid wealth accumulation. Given that these assets are tied to the presidency of the United States, it’s essential to recognize the potential risks involved. With thousands, if not hundreds of thousands, of retail investors potentially standing to lose money, prudence should be the watchword. Those who purchased these tokens only a few days ago have already experienced a 30% decline in their initial investment.

Beyond the matter of financial transfers, another significant aspect to consider is regulation. As reported by online influencer Hailey Welch in December, she was actively working with legal representatives following the loss of millions of dollars by investors in her HAWK memecoin.

One potential rephrasing for your statement could be: A significant risk associated with these tokens is the emergence of imitation ones, such as those labeled BARRON and IVANKA, which are tied to other Trump family members. Many of these imitation tokens plummeted in value by over 95% almost immediately after their release.

Even though many traders were cautious about Trump’s rapid growth, one clever investor spotted a chance in its vulnerability. He boasted that he sold the token when it was worth $67 and stood to gain approximately $2.7 million if it dropped to $55. Currently, Trump is trading at $47.

Check out related articles: Balaji Critiques Meme Coins, Labeling Them as a ‘Zero-Sum Game’ as TRUMP Coin Sparks Market Chaos

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For further reading, here are some articles on the topic: Balaji Bashes Memecoins, Describing Them as a ‘Zero-Sum Game’, with the TRUMP Token Igniting Market Turmoil.

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2025-01-20 18:44