The value of Donald Trump’s cryptocurrency, a meme coin aptly called $TRUMP, has fallen off a cliff – and its investors have lost around $12 billion.
(A cryptocurrency is typically labeled a meme coin if it has no intrinsic function but originates from an internet meme, like DOGE coin. In contrast, the coin Ether is used to trade on the blockchain platform Ethereum, which allows users to build smart contracts, among a host of other applications.)
This decline is in line with a wider crypto rout, which has seen Bitcoin dive by 20 percent since Trump’s inauguration last month. Ethereum, the second-largest cryptocurrency, fell to a 16-month low on Tuesday.
Trump launched his meme coin on January 17, and by the time he had been sworn into the Oval Office for a second time three days later, its market capitalization had skyrocketed to around $15 billion. However, as ARTnews previously warned when it reported that the president had labelled $TRUMP as an “artwork” in small print on its website, meme coins often disappear as quickly as they rise in value, leaving hoodwinked investors holding the baby. At the time of writing, $TRUMP’s market cap is just $2.48 billion.
Investors who had pumped money into the meme coin leading up to the inauguration were driven by speculation that the White House would take a pro-crypto approach and would create a Bitcoin strategic reserve. But analysts said the president’s perceived inaction on his pro-crypto campaign promises is driving prices down.
“We think that a lot of money went into crypto on the hope that Donald Trump would institutionalize crypto when he got to office,” Kathleen Brooks, an analyst at finance firm XTB, told GB News on Friday. “However, comments about crypto since Mr Trump took over the presidency have been conspicuous by their absence. This could be why investors are flooding to the exits.”
Trump tried to inject some nitro into the crypto markets on Sunday by announcing that his plans for a US strategic reserve were in motion. Prices rallied immediately after but have since slumped as investor optimism over the reserve faded.
Analysts have also pointed the finger at escalating trade tensions as a reason for crypto’s fall, with Trump confirming on Tuesday that tariffs on Mexico, Canada, and China would come into force imminently.
“Donald Trump’s aggressive trade approach has sparked concerns with investors hurtling away from riskier assets, and the huge hack of the Bybit exchange in Dubai has also rattled sentiment,” Susannah Streeter, the head of money and markets at Hargreaves Lansdown, told the Guardian. “Without any firm moves from Trump to show his support for the crypto sector, nervousness looks set to continue.”
Cyber attackers stole $1.5 billion of digital assets from the Bybit exchange in February, further damaging investor confidence in crypto. The FBI has blamed North Korea.
Cryptocurrency or artwork?
On $TRUMP’s website in small print it reads, “TrumpMemes are intended to function as an expression of support for, and engagement with, the ideals and beliefs embodied by the symbol ‘$TRUMP’ and the associated artwork, and are not intended to be, or to be the subject of, an investment opportunity, investment contract, or investment of any type.”
Georg Bak, a digital art advisor and co-founder of The Digital Art Mile art fair, told ARTnews that attributing the coin as an artwork probably has less to do with Trump’s secret desire to be an artist than the legal protections such a declaration can afford.
“Labeling [$TRUMP] as art can provide certain protections, avoid legal challenges, or redefine its purpose in ways that align with legal or regulatory frameworks,” Bak said. “One of the biggest legal challenges for cryptocurrencies and meme coins is being classified as a security under financial regulations like the Howey Test [a standard set by the US Supreme Court in 1946]. If a coin is deemed a security, it must comply with strict regulations that require registration, disclosures, and compliance measures. By declaring a meme coin as art or as a cultural product, its creators can argue that it is not an investment vehicle but a collectible or a creative expression.”
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