The crypto market has just been rocked by one of the most spectacular debacles in its history. The “OFFICIAL TRUMP” ($TRUMP) memecoin has crashed, leaving thousands of investors with colossal losses estimated at $2 billion, while its creators reaped substantial profits.
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2 billion lost in Trump memecoin crash
On January 17, the launch of the $TRUMP memecoin rocked the crypto market. In just 24 hours, this crypto inspired by the former U.S. president had propelled itself into the top 20 of the CoinMarketCap. Its value soared to an all-time high of $72.60 on January 19, propelling its market capitalization to an impressive $14.5 billion.
However, the initial euphoria quickly gave way to a descent into hell. According to CoinGecko data, the token price plummeted by 80% since its historic peak, bringing its capitalization down to around $3 billion.
According to a new report, 813,000 crypto wallets recorded losses totaling $2 billion. Meanwhile, the Trump Organization and its partners reportedly took in around $100 million in transaction fees.
Regulators face a legal vacuum
This debacle quickly attracted the attention of many. The senator Elizabeth Warren was among the first to sound the alarm, calling for a thorough investigation. Her concerns relate not only to the TRUMP token, but also extend to the memecoin MELANIA, launched by Trump’s wife, highlighting ethical risks and potential national security implications.
On the regulatory front, Hester Peirce, SEC Commissioner, said in an interview that the majority of memecoins fall outside the SEC’s jurisdiction, adding a further layer of complexity to the situation.
Industry analysts, including Nate Geraci, president of ETF Store compare memecoins to collectors’ items rather than traditional financial assets, complicating their regulatory framework.
The collapse of the Trump memecoin shows the dangers inherent in these highly speculative assets, despite the notoriety of their creators. Unlike cryptos such as Bitcoin or Ethereum, which are based on solid technological fundamentals, memecoins rely solely on fad, community support, and celebrity influence. This reliance on emotional rather than fundamental factors makes them particularly vulnerable to market manipulation and catastrophic losses.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
