Donald Trump, never one to miss a branding opportunity, has added a new venture to his portfolio: a cryptocurrency token called $TRUMP. Following his pattern of leveraging his name, the former president has previously sold Trump-branded guitars, sneakers, and even Bibles. His foray into the crypto world, however, has raised eyebrows and ignited a debate about the potential implications.
After its launch on Friday evening, the value of the $TRUMP token experienced a dramatic surge, jumping from $6 to over $70 per coin within a day. Because two of Trump’s affiliate companies own a significant portion of the total supply, the value generated was substantial. At one point, estimates suggested the token accounted for a large part of Trump’s net worth. In a further expansion of this venture, Melania Trump also announced her own coin, $MELANIA.
Both $TRUMP and $MELANIA are memecoins, a type of cryptocurrency that often lacks underlying business fundamentals. These coins, fueled by social media hype, can experience rapid valuation increases, followed by equally swift declines. This pattern, common in the memecoin market cycle, involves early adopters profiting at the expense of later investors. Although Trump’s influence might give $TRUMP some staying power, memecoins are inherently volatile. The value of $TRUMP has already experienced a significant drop.
This move aligns with Trump’s efforts to position himself as an ally of the crypto industry. He has expressed intentions to create a “strategic national bitcoin stockpile” and has promoted other crypto businesses. The token was announced on Truth Social alongside the pre-inauguration “Crypto Ball,” signaling a shift in the industry’s relationship with the political establishment. Some see this as an opportunity for the crypto industry to thrive after years of regulatory scrutiny.
However, the legal status of memecoins remains uncertain. The Securities and Exchange Commission (SEC) has previously targeted crypto companies. Trump’s impact on the SEC could influence the regulatory landscape. The value of Trump’s new hypothetical billions depends on the token supply. If he attempts to cash out, the price could quickly drop. Trump also called bitcoin a “scam” in the past, but now he’s promising a golden age for the industry.
A matter of concern involves the lightly regulated nature of memecoins, which allows anyone to buy them. This could potentially expose the market to 12-year-olds with credit cards and even foreign interests. The memecoin gambit might encourage other political and cultural figures to release similar tokens, and there is a risk that foreign actors might try to exploit these initiatives.
While much of the crypto world has welcomed Trump’s return, some prominent defenders are growing uneasy. $TRUMP “exposed the worst parts of the crypto industry to the public eye,” as one investor pointed out in an interview. There is concern that the embrace of memecoins could undermine the industry’s efforts to achieve legitimacy.
The $TRUMP token does not offer the tangible value of his past ventures like Trump Steaks. The crypto world is awaiting Trump’s next moves.
