Trump’s $TRUMP Meme Coin Sparks Crypto Chaos Amid Wild Price Swings

WASHINGTON, D.C. — Former President Donald Trump‘s foray into the cryptocurrency world with the launch of the “Official Trump” token, or $TRUMP, has triggered a frenzy of speculation and volatility in the crypto market. The meme coin, introduced on the Solana blockchain, saw its value skyrocket by over 1,100% within 36 hours before plummeting nearly 50% by Tuesday morning.

The $TRUMP token, announced late Friday, quickly became a viral sensation, surging from $6 to $75 at its peak. However, its value dropped to below $40 by Tuesday, according to CoinMarketCap. The token’s wild price swings have raised questions about its legitimacy and the potential financial windfall for Trump, who is linked to entities controlling 80% of the token’s supply.

The “Official Trump” website lists CIC Digital LLC, an affiliate of the Trump Organization, and Fight Fight Fight LLC, a recently incorporated business, as owners of the majority of $TRUMP’s supply. However, the exact distribution between the two entities remains unclear. Even if Trump controlled the full stake, estimates of a $58 billion windfall based on the token’s fully diluted valuation are misleading, as they assume all 1 billion tokens will retain their value as they are released over the next three years.

Market capitalization, a more sensible metric, suggests an 80% stake would be worth $6.2 billion. However, this figure is speculative, as it relies on tokens not yet in circulation. Trump’s net worth, excluding the meme coin, stands at $6.2 billion, primarily from his social media business and real estate holdings, according to Forbes.

The launch of First Lady Melania Trump‘s $MELANIA meme coin further complicated the market, with analysts noting it diluted the Trump crypto brand. “Given how fast [$TRUMP] reached a stratospheric market value, the 80% supply held by insiders does create some pressure on its market value,” said Gautam Chhugani, an analyst at Bernstein.

Meme coins like $TRUMP and $MELANIA lack underlying value, unlike stocks or bonds, and are highly volatile. The “Official Trump” website disclaims any investment intent, stating the tokens are meant to express support for Trump’s ideals. Despite this, the tokens have drawn criticism for their potential to mislead investors.

Shares of Trump Media & Technology Group, the parent company of Truth Social, fell 11% on Tuesday, marking their worst daily loss since early November. The decline wiped approximately $500 million from Trump’s equity stake in the company.

Analysts warn that the Trump meme coins could harm the broader crypto industry’s reputation. “There’s now a fear that people who are not super familiar with this industry will see it as a cash grab,” said Molly White, a cryptocurrency chronicler. “They worry this will give crypto a bad name.”

The launch of $TRUMP and $MELANIA has also raised ethical concerns, given Trump’s position as a public figure. Ari Redbord of TRM Labs noted that Trump’s involvement could attract illicit actors or foreign governments. “Consumers really need to understand what they’re investing in, because you’re going to lose big and you could potentially win big,” he said.

As the crypto market braces for further volatility, the Trump meme coins underscore the risks and uncertainties of investing in digital assets with no intrinsic value.