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The value of cryptocurrency meme coins launched in the last three days by President Donald Trump and his wife Melania is soaring, leaving those who bought early with handsome returns worth several times their original investment.
So, should you pile in, hoping President Trump’s inauguration continues to drive prices higher – or are you better off steering well clear? And if you do buy in, what exactly will you own?
Mr Trump celebrated his inauguration as the 47th president of the United States by launching a so-called ‘meme coin’ last Friday, January 17. The token initially soared from about $7 (£5.72) in value to a peak of $75 (£58.80).
According to crypto trader Coinbase this meant that the total value of the coins in circulation at that time was worth more than $14 billion (£11.44billion).
But when his wife Melania launched a rival cryptocurrency $Melania on Sunday, a day before Mr Trump officially became president, it caused the $Trump to roughly halve in value to $7 billion (£5.7 billion). It has since recovered, and the tokens are now trading for about $54 (£44.10).
The $Trump and $Melania currencies are dubbed meme coins because, unlike other cryptocurrencies such as Bitcoin, they are issued as tokens to represent an historic moment, rather than a digital currency that can be traded as an alternative to cash.
Traditionally seen as a novelty idea, the fact the $Trump currency rose by more than ten times from its initial value, could attract investor attention.
However, with Mr Trump owning an estimated 80 per cent of the 200 million tokens so far released – which are held by CIC Digital, which is affiliated to conglomerate Trump Organisation, there are concerns that it could be primarily a money-making project for the new White House incumbent.
One billion $Trump coins are to be released for people to buy over the next three years – but once his four-year term has been completed it is uncertain whether they will still be offered for trading.
Experts are warning against putting money into the newly launched $Trump or $Melania crypto coins as an investment – but to treat them as a ‘digital memento’.
Glen Goodman, author of bestselling book The Crypto Trader, says: ‘Make no mistake – these are only to be viewed as a collectable, a digital memento, and not a currency in which you can trade.
'It reminds me of cigarette cards of iconic cricket stars of the past that used to be highly valued but are now almost worthless. Even if Trump were to be regarded as the WG Grace of his time as president, by issuing one billion cards, how much do you think they will end up being worth in years to come?’
He adds: ‘Right now Trump is on top of the world – there is a Make America Great Again feeling of goodwill. But what happens mid-term when some unpopular decisions have been made – or when he is no longer president? That feel good factor could soon disappear and take down the value of his meme coin along with it.’
Despite $Trump initially soaring tenfold in price after launch, the $Melania token did not get the same uplift, but seemed to pull down the value of the other meme coin. The $Melania had a similar launch price of about $7 and just a day later was trading about 40 per cent up at close to $10.
Mr Goodman says: ‘As it always is with Trump, it is all about him. He is the MAGA icon and US president, and collectors will be drawn to him, wanting to purchase a token to put into their digital wallet to show off to friends. Melania may have more style, but she is not so iconic.’
Chris Beauchamp, an analyst who studies cryptocurrencies at trading platform IG Markets, says: ‘Enormous enthusiasm for a new president has helped boost the value of his meme coin.
'Right now, it means a lot of people may be rolling their eyes in incredulity. But you just have to look at how when the $Melania token was released it became a distraction – lowering the immediate appeal of $Trump. It shows just how volatile it can be.’
Yet Mr Beauchamp believes the launch of a Trump token could spell good news for cryptocurrencies, as it indicates Mr Trump’s openness for trading in digital money.
He says: ‘When Bitcoin smashed through the $100,000 mark in December it was a new high. While the $Trump token should only be viewed as a collectable rather than an investment, it has also fuelled interest in cryptocurrency – which saw Bitcoin rise to a new all-time high above $109,000 on the day of Trump’s inauguration.’
Despite the launch taking the cryptocurrency trading market by surprise, major traders such as Binance, Coinbase and Kraken, have announced that they plan to trade both of these meme coins on their online markets.
Petr Chromy, a cryptocurrency trader and IT engineer, who has been trading for more than a decade, says: ‘For me, the Trump meme coins are utterly ridiculous. You can go shopping with well-known cryptocurrencies, such as Bitcoin or Ethereum, buying anything from a cup of coffee to a Tesla car. But you cannot purchase anything with a $Trump or $Melania.’
He adds: ‘It seems to be little more than a money grab – with the supply being carefully controlled. It is pure speculation on something with no intrinsic value. My view is that this is not an investment but a pointless gamble.’
Mr Chromy suggests that if anyone was hoping to make money out of the meme coins, they would be far better off investing in technology firm Solana, which provides the blockchain technology, the database from which the $Trump and $Melania meme coin tokens are distributed.
He says: ‘Just remember, during the gold rushes of the past, it was those who invested in the manufacture of picks and shovels who usually made far more money than the prospectors who were simply hoping to strike it lucky.’
Solana was launched five years ago when it began trading at just $0.95 a share. Interest in the blockchain technology that it provides soon captured the imagination of investors.
Just three years ago Solana was trading at $84 – but its stock has continued to rise since, along with increasing numbers of crypto launches.
The news that Mr Trump was using Solana for his own $Trump token has seen it enjoy a 20 per cent hike in price in just three days - from $221 (£180) on Friday to $253 (£207) on Monday, the day he was inaugurated.
Coinbase Global is another listed software specialist that has been involved in supporting crypto launches using its blockchain technology.
Showing the volatility of the sector, it has provided an occasionally bumpy ride for investors – with the share price falling over the past five years by 14 per cent, despite the value of currencies such as Bitcoin doing so well.
However, over the past 12 months the share price has recovered sharply, and it is up 130 per cent in a year from $167 (£136) to $295 (£241) on Monday.
Mr Trump won the US presidential election with more than 77 million votes – compared to Kamala Harris who received some 75 million. If he is to succeed in selling off all one billion meme coins expected to be released, it means that each one of his voters will have to buy more than 13 of his meme coins if demand can outstrip supply – and raise value. At the current value of $54 (£44) per token, it means each voter would have to pay $702 (£573).
But best-selling author Mr Goodman is concerned the $Trump meme coin will not only be purchased by fans – but also wealthy individuals who want to buy influence. This is because if the token goes up in value, then Mr Trump stands to make money as the architect behind the idea.
Mr Goodman also points out that unlike other collectables – such as royal memorabilia plates – there is no physical asset to hold just a note in your digital wallet of ownership.
He says: ‘Yet I fear the madness of crypto fever is not yet over – and Trump could well be opening the floodgates for other celebrities to launch their own meme coins as a way to raise money from patron fans.
'Investors should consider the token as an “imaginary thing” – as it is not an established cryptocurrency such as Bitcoin.’
The Trump coin website, /#how-to, states: ‘Trump Memes are intended to function as an expression of support for, and engagement with, the ideals and beliefs embodied by the symbol “$TRUMP” and the associated artwork, and are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.’
