Everyone knows that today the new-old presidential couple is returning to the White House. However, not everyone knows that this same couple has earned several billion dollars in the past few days.
On Friday, the news broke that a new official meme coin from Donald Trump ($TRUMP) was released into circulation. Then, yesterday, another piece of news followed: Melania also launched her own meme coin ($MELANIA).
And so began a wave of speculation and conspiracy theories.
I’ll try to address a few of them right away.
1/ The Trump’s coins are not and will never be payment instruments
These are what are known as meme coins, which are created to support someone/something and/or for fun. They are not payment instruments that could replace a transaction/settlement currency, and they are not used for transactions. They have collectible value, and as such assets, they can be treated as investment/speculative assets, not utility ones.
2/ Such assets carry a very high risk
The values of both of these coins have skyrocketed in the last few hours. At the time of writing this post:
$TRUMP
market cap: $10B+
fully diluted valuation: $53B+
$MELANIA
market cap: $1.4B+
fully diluted valuation: $9.8B+
Like all such assets, they are highly volatile. Donald’s coin has already lost over 30% since then, while Melania’s coin is still growing. What will happen tomorrow, the day after, or in a month – no one knows.
3/ According to media reports, Trump’s company owns 80% of the $TRUMP coins and 35% of the $MELANIA coins
So, the first couple has, in just a few hours, become cryptocurrency billionaires and, on paper, “earned” more this weekend than their entire fortune up to now.
4/ Trump’s company has a 3-year unlocking schedule for the $TRUMP coins, while for Melania, it’s 13 months
This should prevent the situation we’ve seen in many other similar ventures, where everything suddenly dumps, and the value crashes.
Although, as for the value – of course, anything can happen.
5/ Trump is clearly signaling that cryptocurrencies will be a major focus of his presidency
It’s hard to interpret this any other way – especially just a few hours before the inauguration – than as a clear signal to the market that the new administration plans to invest heavily in crypto.
And, of course, while doing so, the presidential couple is monetizing their personal brand, well, that happens.
6/ Ethical issues remain open
They’re not the first, and they won’t be the last, to release such coins into the market. However, they are certainly the only ones doing it while also being among the most powerful people in the world.
And, of course, questions arise as to whether they should be doing this, whether it’s appropriate, whether it will lead to abuses, whether it could result in external pressures, or become a tool of influence over the president. These questions are already being asked and will continue to come up in the future.
In the near future, we’ll likely find out all about this.
