This is undoubtedly one of the most explosive launches in the history of cryptocurrencies. Donald Trump, now inaugurated as president of the United States, launched his official memecoin a few days ago. But should you buy it? Where has the boat passed? Here are the elements to take into account.
Donald Trump now has his own cryptocurrency, “TRUMP”
An unexpected event to say the least, far from being unanimous. This weekend, Donald Trump, who is preparing to begin his second presidential term, launched his memecoin soberly named “TRUMP” on the Solana blockchain.
First, investors were cautious, suggesting that the American billionaire's account had been hacked. But nay: Donald Trump quickly posted the same press release on Truth Social, his social network launched in 2021. That was all it took for the machine to go into overdrive: the capitalization of the TRUMP token climbed by several million dollars in a few moments… then by a few billion.
Launched at a few cents, the official memecoin of the new president of the United States fetched a record price at $73.43, and this in less than 48 hours.
Evolution of the market capitalization of the TRUMP token
At the time of writing, the TRUMP token sits in 26th place among the most capitalized cryptocurrencies. A completely extraordinary performance, but the merits of which are at least subject to debate. To put it simply, TRUMP, just like the MELANIA token launched with the image of his wife the next day, is a memecoin. That is to say, it has no use, other than the fact that it has a speculative aspect..
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A memecoin that is widely debated
Why has TRUMP caused so much debate? Because, even within the crypto community, although largely accustomed to ludicrous stories almost daily, this launch caused a feeling of “too full”also accentuated by the launch of the president's wife's memecoin. And, according to Eric Trump, the story is not yet over.
“ While it's tempting to dismiss this as another typical Trump theatric, launch of official Trump token opens Pandora's box of ethical and regulatory questions said Justin D'Anethan, an independent crypto analyst. “ Should public figures, especially those with such political influence, have this type of power in speculative markets? This is a question that regulators will be sure to examine “, he clarified.
Even among some of Trump's supporters, the idea did not catch on. Some even went so far as to say that they already missed Gary Gensleror at least that his task was perhaps not completely meaningless after all.
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“ Basically, we had an informal rule that presidents should not create or manage businesses that might pose a conflict of interest. […] The creation of a bunch of memecoins and DeFi protocols opens the possibility for widespread violations of the emoluments clause, said Nic Carter, general partner at Castle Island Ventures and a Trump supporter. “ Not to mention the obvious conflict of interest given that Trump can set cryptocurrency policy, » he clarified.
Rightly so. When Donald Trump promised a strategic reserve of Bitcoins, BTC mining “made in the USA”, to create a “crypto council” or to defend the right to self-custody, the majority of investors expected that the American government makes a 180-degree turn in terms of the defense and democratization of the king of cryptocurrenciesnow adopted by BlackRock – the world's largest asset manager.
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For now, all these promises have only served to woo the pro-crypto electorate, and they remain promises.
For the moment, investors, hanging on the lips of Donald Trump, will have to settle for a memecoin without fundamentals, and whose website was created less than a month ago. That of his wife Melania was also created a day before the launch of his memecoin. Some might see this as a quick reaction to the success of the TRUMP token. Why not create a second juicy opportunity to generate money without work?
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Should you buy TRUMP memecoin?
Is it reasonable to buy TRUMP token? If we put aside the purely speculative aspect of memecoin – recalling the non-existent intrinsic value of this asset class, let's still take a look at the “tokenomics” aspect of this project.
First element to remember, 80% of the total supply of this memecoin is not yet in circulation. According to the project whitepaper found on the official website, 10% of all TRUMP tokens were allocated for liquidity purposes (for DEXs) during the TGE, and the same percentage was dedicated to public distribution. Six groups were defined during the TGE, each representing the creators of the token as well as CIC Digital LLC (the same company behind Donald Trump's NFTs).
The latter will be allocated a portion of the tokens according to the schedule defined below. In other words, until the first unlock scheduled in 3 months, only 20% of the total planned supply is currently in circulation, while the rest of the supply will be unlocked gradually.
What does this mean in practice? Regarding unlocks, this means that the value of TRUMP tokens in circulation will be diluted as new ones are added. At the time of writing, the crypto market cap is $9.9 billion, while the fully diluted value will be 5 times higher: $49.6 billion.
It should also be noted that the 800 million tokens planned for later are located on a single address.
TRUMP token issuance schedule
It is good to note that approximately 110,000 addresses invested in the TRUMP token within 3 hours of its launchand 500,000 within 16 hours. The profit taking may therefore not be over.
Does the Trump team itself believe in the future of memecoin? World Liberty Financial, the Trump clan's crypto project, has not bet a single cent on it. Their investments tend to focus on proven cryptocurrencies such as Bitcoin, LINK or Ether.
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Regarding the nature of TRUMP, it is a memecoin, so it is by definition extremely volatile. After the meteoric rise it has experienced, it is unlikely that its price will go much higher. And investors know this, which is why liquidity transfers are commonplace after a new memecoin hits its peak.
A memecoin running out of steam? So, why not direct your money towards the one in vogue, the one that still has every chance of seeing its value explode? Why not try to become one of the few millionaires who invested at the right time in the right memecoin?
This was also verified when Melania Trump, the wife of the American president, launched her own token. The value of Trump's memecoin literally fell by 50% in the process. And this same token is also falling: The MELANIA token reached a peak of just over $13 this morning, and is now trading at less than $6.
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Did you buy Trump yesterday? Then you are probably losing 20 to 40% on your investment. What will happen tomorrow? Impossible to predict.
Activity on DEXs has in any case considerably reduced regarding the TRUMP token:
Evolution of activity on DEXs around Donald Trump's memecoin
For 3 months, the TRUMP price will fly with the wind. Then, gradually, the project teams will be able to sell them little by little. Should you ultimately buy?
We will end by quoting Balaji Srinivasan, former CTO of the crypto exchange Coinbase:
A memecoin is a zero-sum lottery. There is no wealth creation. Each buy order is simply offset by a sell order. And after an initial spike, the price eventually collapses, leaving the last buyers to lose everything.
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Sources: Reuters, DEX Screener, Dune
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Investments in cryptocurrencies are risky. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your capacity to lose part of this savings. Do not invest if you are not prepared to lose all or part of your capital
As Editor-in-Chief of Cryptoast, I am committed to making the world of cryptocurrencies and Web3 accessible to everyone. An expert in identifying the most relevant news, I attach great importance to the quality of the articles produced by Cryptoast. I ensure that our readers benefit from reliable, verified information presented in a clear and easy-to-read manner. My goal is to share quality knowledge to better inform and educate our audience about this constantly evolving world.
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