Trump’s memecoin: A new crypto frontier or market spectacle?

What happened

Donald Trump has officially entered the world of memecoins with the launch of his own token on Friday, 17 January 2025, sparking widespread attention and market activity. Initial confusion over the token’s backers led to a market frenzy after Trump publicly endorsed it on social media. While dozens of tokens seem to relate to Trump (with names like MAGA, First crypto president, Super Trump, etc.), Friday’s token is the only token officially linked to Trump – and was simply named “Official Trump”.

What has been the result so far? It is simply one of the most successful token launches in crypto history. The tokenomics of the coin are striking: With an initial supply of 200mn tokens, the market cap of the circulating tokens is around $11bn, at the time of this writing. The market cap had peaked to approx. $15bn on Sunday, before a flash crash erased about 50% of the market cap in a few minutes (which would have been caused by a single wallet dumping its assets).

Nevertheless, it is today part of the top-20 digital assets by market capitalization. Trading volumes have also been significant, with >$40bn traded over the last 24 hours. The largest centralized exchange, Binance, has already listed the new token on its platform, while Coinbase Global Inc has added it to its roadmap.

The token’s creators (mainly CIC Digital LLC, an affiliate of The Trump Organization, and Fight Fight Fight LLC, a Delaware entity incorporated on 7 January 2025) raised hundreds of millions – if not billions, by selling the tokens. They will receive an additional 800mn tokens over the next three years; the total supply of The Official Trump will then reach 1bn tokens.

This explosive launch underscores the intersection of political influence and blockchain’s viral potential.

Impact on our Investment Case

It is important to note that we have no view on this new token, as well as on the “Official Melania” that was launched later on Sunday. Even the token’s website states that this coin should not be considered as an “investment opportunity”, but solely as an “expression of support for [...] the ideals and beliefs embodied by the symbol $TRUMP”, whatever that means. We firmly believe that blockchain technology has better things to offer than memecoins.

However, memecoins, while often dismissed as frivolous, have proven their ability to attract attention and liquidity to the crypto ecosystem. Such launches demonstrate how viral tokens can bring blockchain into mainstream conversations. This can be seen, for instance, through Google searches of the word “crypto”, which is forecasted to reach an interest level unseen since 2021 (i.e., the peak of the previous cycle). Memecoins serve as an entry point for retail investors, highlighting the broader potential of decentralized finance and smart contract technology.

Solana’s Role in the Spotlight

The Trump memecoin is built on Solana, a high-performance blockchain often compared to Ethereum. Known for its speed and low transaction costs, Solana’s choice as the token’s protocol is strategic.

After the debacle of the exchange FTX in 2022, which was a strong supporter of Solana, the protocol had to regain users' trust (even if it was not directly involved in FTX’s fraud). This was achieved through memecoins. In parallel to the approval of the Bitcoin ETFs in the United States, memecoins started to thrive again in 2024. The high number of transactions per second that the protocol can handle was appealing for platforms like pump.fun, which facilitates the creation of memecoins on Solana in a few clicks.

This move also aligns with Solana's being considered an “America-first” blockchain and President Trump’s vision for a self-reliant, U.S.-led blockchain ecosystem. The protocol was developed by Solana Labs, an entity mainly based in California. This launch highlights both Solana’s technical advantages and its geopolitical significance.

Timing and the Trump Family’s Crypto Ventures

The timing of the memecoin launch—just two days before Trump’s inauguration—raises eyebrows. While we refrain from speculating on potential conflicts of interest, this launch is a continuation of the Trump family’s growing footprint in the crypto space.

From NFTs to crypto ventures (e.g., World Liberty Financial, whose purpose remains unclear months after its launch and which is currently in the process of raising up to $550mn through another token sale), their ventures signal a broader strategy to capitalize on blockchain's transformative potential - and a desire to monetize it. This latest move adds another layer to the narrative, showcasing the integration of political branding and digital assets.

Our Takeaway

Trump’s memecoin launch is more than a market event; it’s a statement of intent. By aligning himself with the crypto ecosystem, Trump is signaling his ambition to make the U.S. the global hub for blockchain innovation.

This launch has brought significant publicity to the crypto market, though it also carries risks. Retail investors drawn to the memecoin frenzy must contend with the possibility of sharp drawdowns. Will TRUMP’s investors be able to absorb the millions of tokens that will flood the market as soon as three months from now?

Nevertheless, the anticipation surrounding Trump’s first executive orders due today (potentially designating crypto as a national imperative, stopping legal actions against crypto exchanges or integrating Bitcoin or “America-first” cryptos into strategic reserves) adds a layer of excitement to the market, which will eventually be much more important for the ecosystem than Trump’s memecoin.