Trump's cryptocurrency connections are proving profitable.
Trump's cryptocurrency connections are proving profitable.
With Donald Trump now backing cryptocurrencies, the crypto industry is hopeful for his presidency. Major cryptocurrency companies, investors, and pro-crypto congressional candidates have donated generous sums to Trump's campaign, leading to Bitcoin and other cryptocurrencies reaching record highs upon his election victory. But before the industry can fully profit from anticipated executive actions such as creating a national cryptocurrency reserve or easing consumer protection regulations, Trump has a personal agenda – to make a profit himself.
Before his inauguration, Trump's company, the Trump Organization, launched two digital tokens known as memecoins: the "$ Trump" and "$ Melania" coins. The Trump coin, announced on Truth Social, is a cryptocurrency that might entice buyers to "own a piece of history" and "celebrate a leader who never backs down." Memecoins may not offer tangible value or functionality like Bitcoin or Ethereum, but they have soared in popularity in the crypto world.
The initial value of the Trump coin quickly leaped from around $6 to over $70, giving it a market capitalization of nearly $15 billion. Initially, only a small portion of the 999 million coins is tradable. Eighty percent of the total value is controlled by the Trump Organization.
The Crash of the Trump Coin
Two days after its launch, the price of the Trump coin plummeted by nearly half, wiping out about $7 billion in market capitalization in a matter of minutes. Trump supporters who invested hastily were left in dismay. The crash might have been caused by the unexpected launch of the "$ Melania" token, dedicating to the First Lady, which rivaled its husband's token and raised uncertainty about the future of other tokens.
The crypto industry was initially hopeful about Trump's presidency as a potential ally. However, the sudden launch of memecoins has dampened this excitement. Gabor Grubacs, the crypto chief of investment management firm VanEck, criticized the move, arguing that Trump's presidency had "lost a lot of credibility." Grubacs called for Trump to fire his crypto advisors, as he was responsible for the crash of his own coin and the financial loss of his supporters.
Despite expressing disdain for cryptocurrencies in his earlier term, Trump's changed stance has been met with support from the industry. He has raked in earnings through various means, such as an NFT collection, digital collectible cards, and a trading platform with a custom digital currency.
Enrichment Insights:
- Market Activity and Speculation: The sudden launch of the Trump coin sparked intense speculation and trading activity in the crypto market, causing the coin's price to skyrocket within hours of its debut.
- Regulatory Clarity: Trump's executive order on crypto aims to promote technology-neutral regulations, which transparently addresses the industry's concern of "regulation by enforcement."
- Industry Reactions: The credibility of the Trump coin's launch was lent by the use of Trump's verified accounts and ties to CIC Digital LLC, a firm involved in his NFT projects.
- Controversy and Criticism: Some lawmakers have expressed concern that the creation of Trump's coins has personally enriched him and could be exploited by foreign powers.
- Public Perception: Trump's crypto moves have positioned him as a polarizing figure in the crypto space, with both supporters and critics closely scrutinizing his actions.
- Shift in Public Image: Trump's involvement in cryptocurrency marks a significant shift from his earlier skepticism, positioning the US as a global hub for crypto innovation.
After the crash of the Trump coin, some critics, such as Gabor Grubacs from VanEck, called for Trump to reevaluate his crypto advisors due to the financial losses experienced by his supporters. Despite Trump's earlier skepticism towards cryptocurrencies, his changed stance and involvement in various crypto ventures, like NFT collections and digital collectible cards, have positioned the United States as a significant player in crypto innovation.