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The launch of meme coins from Donald Trump and his wife Melania triggered a record-breaking crypto rally that has seen the market surge by more than half a trillion dollars over the last week – but both tokens are already experiencing extreme price volatility.
The incoming First Lady, who will enter the White House on Monday, launched a cryptocurrency on Sunday, just one day after her husband released his own $TRUMP meme coin. They have a combined market cap of more than $10 billion, though this has fallen from a peak of $16 billion over the weekend.
Positioning himself as the first ever pro-crypto US president, Trump has pledged to usher in a number of policies that could continue to benefit the market, prompting bitcoin to reach a new all-time-high just hours before his inauguration.
Yet despite the positive momentum, some experts have issued warnings about the latest meme coins and their potential impact on the market.
What is a meme coin?
As the name suggests, meme coins are typically based on a joke or trend that has no inherent value. The first ever meme coin, dogecoin, was launched in 2013 as a “tongue-in-cheek cryptocurrency” that poked fun at the emerging bitcoin boom.
There have since been thousands of cryptocurrencies launched, based on everything from baby hippos, to the ‘Hawk Tuah girl’.
The websites for both $MELANIA and $TRUMP describe the tokens as meme coins, but claim that they are not designed to be an investment opportunity, nor part of any political campaign.
“Melania memes are digital collectibles intended to function as an expression of support for and engagement with the values embodied by the symbol MELANIA and the associated artwork, and are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type,” the $MELANIA site states.
Financial advisors have also urged caution with the two new tokens, citing the market volatility in 2021 and 2022 when the meme coin trend first exploded in popularity.
“Let’s be very clear: this is more gambling than investing,” Nigel Green, chief executive of the financial advisory firm deVere Group, told The Independent.
“It’s important to distinguish between speculative meme coins and legitimate digital assets that provide real value and utility… This is not the same as investing in sound assets. Gambling is not the same as investing.”
How will crypto market respond to Trump’s presidency
Crypto market experts have attributed the record-breaking rally to the upcoming inauguration of the first ever pro-crypto president, boosted by the launch of the $TRUMP and $MELANIA meme coins.
“This growth was driven by the successful launch of meme-coins associated with Trump and his wife Melania, whose substantial capitalisation growth positively impacted the entire market,” said Alex Kuptsikevich, the chief market analyst at FxPro.
Other industry figures have warned of ongoing market volatility as a result of the incoming administration, with a positive price trend expected to continue – but only if Trump delivers on his promise to be a pro-crypto president.
Trump’s promises include the appointment of a pro-crypto chairperson of the US Securities and Exchange Commission (SEC), and setting up a bitcoin strategic reserve from the significant stockpile of cryptocurrency amassed from government seizures. This would further tighten bitcoin’s finite supply, while also potentially triggering other countries to do the same.
Speaking at the Bitcoin 2024 Conference in Nashville last July, Trump told the crowd: “For too long our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell you bitcoin.”
If he fails to fulfill these pledges, the crypto market could suffer a catastrophic collapse that could rival the losses experienced during previous downturns. The first casualties would most likely be the $TRUMP and $MELANIA meme coins, though any positive announcements relating to the crypto market could see them further boosted.
““The buildup in short-term BTC volatility highlights growing uncertainty and excitement as traders brace for potentially significant price movements tied to the inauguration,” said Dr Sean Dawson, head of research at the decentralised platform Derive.xyz.
“The positive launches of the $TRUMP and $MELANIA tokens over the weekend shows the crypto-friendly tone of the incoming administration, which could further boost sentiment in the space.”
