The inauguration of President-elect Donald Trump began early this weekend with the release of the Trump and Melania meme coins, and the resulting demand has pushed their combined market cap to a high of over $17 billion, surpassing that of both the Shiba Inu (SHIB). And the Avax blockchain.
One might wonder how investors acquired so much capital on margin at a time when Bitcoin (Bitcoin) was hovering around another all-time high. The truth is they didn’t. The capital pumping up the price of the Trump token was merely a reallocation from existing meme coins that have boosted the cryptocurrency market over the past year.
While some Investors reportedly became millionaires overnightA nasty bite may be waiting for investors in memecoins, which are tokens that have no inherent utility and whose value is determined solely by market demand. Given its popularity-driven price, it will likely take a hit when the next shiny new coin comes along.
He added: “Everyone knows this is a scam. It won’t exist in four years. There’s nothing of value here.” Prominent scam hunter Coffeezilla said in a YouTube video.
When Trump was released early Saturday, an exodus of the likes of Dogecoin (DOGE), Shiba Inu, Pepe (PEPE), and Bobcat (POPCAT) began.
POPCAT has lost 42% of its market cap since TRUMP launched, SHIB and DOGE are down 15% and PEPE is down 22%. The combined market cap loss from these four tokens alone is $13.5 billion, and that doesn’t include double-digit declines for WIF, BONK, and 100 other memcoins.
Trump itself took a huge hit when Melania was issued, losing 58% of its value and reflecting the volatile nature of speculative meme coins. Together they are now worth just $11 billion, with $6.3 billion disappearing in the last 24 hours.
It should be noted that the market value of crypto tokens is determined by the circulating supply multiplied by the price of the asset. Varying levels of liquidity mean that not all of this supply can be sold at once, so the true market value is actually lower than it appears. However, a decrease in the market value of one meme and an increase in another meme indicates a reallocation of capital.
Individual investors, lured by stories of overnight millionaires, are particularly at risk. After all, these are codes issued by the President of the United States. Thousands, if not hundreds of thousands, of retail investors are likely to lose their money. Anyone who bought tokens on Sunday is already in the 30% red zone.
Beyond capital flows, there is also the regulatory issue. Internet influencer Hailey Welsh said in December that she was “Full cooperation with lawyers” After the HAWK memecoin saw investors lose millions of dollars.
Another danger is the copycat tokens, many of which have been created under the names of Barron, Ivanka, and other members of the Trump family. The majority of counterfeit codes It lost more than 95% of its value Just hours after launch.
Still, one savvy trader He saw an opportunity In the fragile nature of Trump’s rise, claiming that he had shorted the token at $67 and that he would make $2.7 million if it reached $55. Trump is now trading at $47.
See also: Balaji slams Memecoins, calls them ‘zero-sum lottery’ as Trump token sends market into a frenzy
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