Trump Effect Sparks Billion-Dollar Crypto Memecoin Surge
Trump Effect Sparks Billion-Dollar Crypto Memecoin Surge.
Tokens derived from online viral phenomena have surpassed Bitcoin in performance over the past month; however, critics argue that this trend indicates excessive speculation in the market.
Cryptocurrencies symbolizing a euthanized grey squirrel, a Thai pygmy hippopotamus, and a cartoon dog have seen a significant increase in value following last month’s US presidential election. The victory of Donald Trump has sparked a wave of speculation surrounding so-called memecoins.
Since early November, the market for tokens that embody viral online moments has grown rapidly, as traders anticipate that Trump’s administration will promote a more crypto-friendly environment and regulatory framework in Washington.
Established memecoins like Dogecoin have outperformed Bitcoin, the largest cryptocurrency, over the past month, and have been joined by a multitude of new coins launched in the days following Trump’s election victory.
Critics, including prominent figures within the cryptocurrency sector, contend that memecoins are merely speculative assets reflecting excessive market enthusiasm, drawing parallels to the non-fungible token craze that characterized the crypto bubble of 2021.
“I am not against memes. But meme coins are getting ‘a little’ weird now,” Changpeng Zhao, the founder of the cryptocurrency exchange Binance, made a post on X last week.
The landscape is populated by millions of memecoins, which can be effortlessly created through online memecoin generators. These tokens lack a viable business model, cash flow, or intrinsic value, and they do not provide their holders with any ownership of tangible assets. Rather, their liquidity is predominantly driven by the enthusiasm and popularity they garner among traders, resulting in significant price volatility.
“They have no value, they never will have value,” Charles Hoskinson, co-founder of the Cardano blockchain, stated about memecoins recently. “There’s no utility behind them, nobody wants them — when they lose their lustre they go to zero.”
All memecoins necessitate a specialized understanding of internet culture. MOO DENG pertains to a Thai pygmy hippo that gained fame due to her lively demeanor; PNUT refers to an orphaned squirrel named Peanut, who was euthanized by New York officials, an event that reportedly incited strong feelings in Trump, as noted by vice-president-elect JD Vance; CHILLGUY symbolizes a meme featuring a laid-back cartoon dog with his hands in his pockets, which has gained significant popularity on TikTok.
Since its inception two weeks ago, the total market capitalization of CHILLGUY has soared to $466 million. Its popularity surged further when MrBeast, the most followed YouTuber globally, declared on X last week that it was the “biggest meme of our lifetimes.”
The surge in popularity of memecoins has motivated others to participate in the trend. Haliey Welch, who gained widespread attention this year as Hawk Tuah Girl, announced last week her plans to introduce a token aimed at bringing her entire community together.
The market capitalization of PNUT has reached $1.2 billion, while PEPE, which is inspired by a comic frog character, boasts a market cap of $8.2 billion—surpassing that of the British supermarket chain Sainsbury’s. Additionally, BONK, a cartoon dog created in response to the FTX exchange collapse to uplift traders on the Solana blockchain, has achieved a market cap of $3 billion.
Traders are expressing enthusiasm following Trump's election and the influential role taken by billionaire supporter Elon Musk, who frequently engages with popular memes on his social media platform, X.
Trump has appointed the world's wealthiest individual to oversee a newly established US Department of Government Efficiency, a title that references Dogecoin, which was initially launched as a satire of the cryptocurrency industry in 2013. Recognized as the first memecoin globally, Dogecoin is a favorite of Musk.
Since the election, Dogecoin's value has surged by approximately 140 percent, reaching around $60 billion—surpassing the market capitalization of US retailer Target and Swiss mining and commodities trading company Glencore.
“Ninety-nine per cent of them [memecoins] are pump and dumps,” stated Ilan Solot, co-head of digital assets at Marex Solutions. “They’re a very, very specific game . . . The game is to get in and get out before others get out,” he added.
RELATED: Hawk Tuah’ Creator Haliey Welch Slammed After Memecoin Crash Sparks Outrage.
It is possible for anyone to initiate a meme coin.
Typically, creators select a blockchain to develop the token, and various online memecoin generators enable users to create coins without requiring any programming expertise. The creators have the authority to determine the token's total supply and the portion they wish to retain for themselves, subsequently listing the coin on either decentralized or centralized exchanges.
Generating excitement and interest is crucial for enhancing the value of memecoins, which allows early investors to profit when prices rise. However, a report by BDC Consulting indicates that 89 percent of these coins have a market value of less than $1,000.
“Most of these fail and have no liquidity,” stated Adam Morgan McCarthy, research analyst at Kaiko. But “these things are like Lazarus if a community gets behind them in force”.
Cryptocurrency exchanges are swiftly seeking to take advantage of the current trend. Prominent platforms such as Gemini, Kraken, and Binance are quickly introducing new tokens and trading pairs, enabling the trading of one token against another.
“It’s an interesting trend that we shouldn’t just dismiss as ‘oh it’s speculation’,” stated Hong Fang, president of crypto exchange OKX. “It’s all about attention and how much people believe in certain things and that gets for the first time reflected in the market, in price.”
Some observers draw comparisons to the speculative excitement that preceded the downturn of the NFT market in 2022.
“It’s got a little bit silly and it feels . . . like what happened towards the end of the NFT market,” stated Geoff Kendrick, global head of digital assets research at Standard Chartered. “At some point, something will happen which will unleash the house of cards and it’ll collapse.”
While the surge in memecoins driven by Trump’s election victory and viral internet culture is impressive, it highlights the speculative nature of the crypto market. These tokens, often lacking tangible value or business models, are primarily driven by hype and enthusiasm, leading to high volatility.
Critics warn that this trend mirrors the unsustainable excitement of past crypto bubbles, such as the NFT craze. Despite the short-term gains, many believe that most of these memecoins lack long-term viability, and the market could face significant downturns once the hype fades. Caution is advised for investors entering this high-risk space.
