Newly elected U.S. President Donald Trump has made headlines once again, this time by introducing his own cryptocurrency, a memecoin called $Trump. True to his persona, the coin has displayed extreme price fluctuations, creating a buzz in financial circles. Within just two days, its value surged to $75 (₹6,475), dropped below $60 (₹5,180), rebounded to $75, plummeted to below $40, climbed to $60, and eventually settled at $31 (₹3,400) at the time of writing.
Volatility and New Additions
Following the launch of $Trump, another memecoin named $Melania, reportedly promoted by his wife, has also hit the market. Despite Trump’s checkered business history—often attributed to the wealth inherited from his father—his venture into cryptocurrencies might prove to be a lucrative way to monetize his fame.
Ironically, this comes after Trump previously dismissed cryptocurrencies like Bitcoin as a “scam.” However, his decision to introduce a personal cryptocurrency while preparing to assume office raises concerns over potential conflicts of interest.
Understanding Memecoins
Unlike Bitcoin, which was originally designed as a decentralized payment system, memecoins lack practical applications and exist primarily for speculative trading. A prominent example is Dogecoin, which began as a joke but saw dramatic price surges following endorsements by Elon Musk, who once referred to it as the “people’s crypto.” Interestingly, the acronym for the Department of Government Efficiency (DOGE), an agency Musk is set to oversee under Trump’s administration, mirrors the popular memecoin’s name.
Other popular memecoins include Shiba Inu, Pepe, Bonk, Floki, and even Fartcoin. Many of these coins are often linked to “pump and dump” schemes, where their creators hype them up only to sell off their holdings, leaving investors with losses.
The Market Capitalization Myth
Recent reports claim that $Trump has reached a market capitalization of $7 billion, with $Melania and Fartcoin valued at $1 billion and $2 billion, respectively. However, such figures should be interpreted with caution.
Market capitalization is calculated similarly to traditional company stocks—by multiplying the total number of tokens by the current trading price. For instance, if 100 million tokens exist and one sells for $10, the market value is estimated at $1 billion. However, in reality, if large holders attempt to sell, prices would likely plummet.
Unlike shares of publicly traded companies that are backed by tangible assets and profits, memecoins lack any fundamental value. Their prices can be easily manipulated, and their long-term stability remains questionable.
Investor Caution Advised
Trump’s own website issues a disclaimer stating that $Trump is not an investment opportunity or a regulated security. This serves as a warning to potential investors against treating it as a serious financial venture.
While the hype around memecoins continues to attract speculative buyers, experts advise caution, emphasizing the risks involved in such highly volatile and unregulated markets.
