What’s the downside of Trump’s meme token

As Balaji Srinivasan pointed out, meme tokens do not create wealth and are essentially a zero-sum game. This means that one crypto trader’s earnings in this case are another’s loss. As a result, the former representative of the Coinbase crypto exchange considers it logical to compare memes to gambling.

Former Coinbase CTO Balaji Srinivasan

Here’s his rejoinder to the situation, as quoted by Coindesk.

There is no wealth creation here. Every buy order is simply offset by a sell order. And after the initial spike, the price inevitably falls and the last buyers lose everything.

Over the past 24 hours, the TRUMP meme-token has collapsed by 34 percent, against which its market capitalisation fell from $14 billion to $9.3 billion. The current exchange rate of the coin is 37 per cent behind the maximum.

Price indicators of Donald Trump’s meme token

That said, as we reported the day before, one of the earliest meme-token buyers made tens of millions of dollars on Trump’s meme-token from an investment of $1 million. A key component of his success was his early purchase amidst other traders, which allowed him to outperform the rest of the market and make his money properly. However, many late investors took a minus on this investment anyway.

According to Balaji, one should treat meme-tokens in the same way as a trip to Las Vegas for gambling. That is exclusively for entertainment purposes. The expert continues.

Most people should invest in assets that retain their value over the long term. Sometimes a meme token can have useful use cases added to it or keep it in the headlines to maintain its value. We’ve seen examples of this before.

In response, many of Balaji’s subscribers asked if Bitcoin – especially in its early years and low popularity – could be considered a meme token. The investor didn’t seem to appreciate the comparison. Here’s his rejoinder.

You can consider any asset a meme-token, and I am not offended by that. However, I am prepared to explain why I consider Bitcoin something different:
1. BTC is an underlying blockchain asset whose hash rate is at 800 Th/s, and the network itself is distributed across hundreds of data centres around the world.
2. It hasn’t been hacked in over 15 years and has survived several 80-90 per cent price drops.
3. It has hundreds of millions of holders worldwide and a global network effect.
4. Its growth has been gradual, not abrupt, and the mining issue schedule limits the volume of sales by one party.
5. It has “industrial applications”. Bitcoin’s blockchain allows the creation of cryptographic proof of existence that is difficult to forge.
6. It is a first-of-its-kind asset that started the entire industry.
Overall, I believe that Bitcoin has proven its ability for long-term existence.

Bitcoin’s strength against fiat currencies

Subscribers did not appreciate such a rejoinder. Still, many points of explanation came down to the fact that Bitcoin got the opportunity to prove its relevance due to its age. So it is not particularly fair to blame young assets for the shortcomings, although Balaji’s position is generally understandable.

The news of the launch of Donald and Melania Trump’s meme tokens was commented on by Bianco Research head Jim Bianco.

You were right if you thought the resounding success of $TRUMP would increase Trump’s greed. He tried to double down with the launch of $MELANIA, but the market perceived that as diluting value. Plus, investors are wary that Trump has a slew of other coins in the pipeline for release.

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How Trump’s meme token has affected crypto

Financial analyst Michael Gade said that the launch of TRUMP has destroyed Donald Trump’s reputation, as the politician’s asset is a common pumpp and dump scheme. However, there is no denying the huge impact crypto has had on the entire market.

As we’ve already noted, many investors have taken to selling off their coins to try and make money on the newly elected US president’s cryptocurrency. Because of this, some of the largest meme tokens became noticeably cheaper overnight.

Situation with the rates of the largest meme tokens by market capitalisation

Also the appearance of memes from Donald and Melania ended with the Solana network record. On Sunday, the trading volume on decentralised exchanges based on this blockchain amounted to $39.2 billion, which was the best result in a day among any chain in the history of cryptocurrencies.

Solana network record for trading volume on decentralised exchanges

12 billion dollars of this figure was accounted for TRUMP and MELANIA tokens. This means that the hype around the named assets turned out to be incredible.


In general, meme tokens are indeed very volatile and can fall by tens of per cent in a matter of hours. With this in mind, investors should be cautious and allocate to such assets only the amounts they can afford to lose. However, there is no point in opposing memes, because their existence is explained by market freedom and traders' desire to invest in such things.
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