The cryptocurrency market has been shaken by the launch of Donald Trump's $TRUMP meme coin, which has seen its value increase by over 11,000% since its release on Friday.
As of Sunday, the coin's market cap reached $66 billion, marking Trump's bold foray into digital assets and merchandise sales ahead of his inauguration on Monday.
The $TRUMP coin was announced on Truth Social on Friday evening, touted as commemorating President Trump's election victory. Based on the Solana blockchain platform, the initial supply is 200 million coins. According to the official website of the coin, the supply is expected to increase to 1 billion coins over the next three years.
The dramatic rise of $TRUMP has sparked a lot of discussion, but Nigel Green, CEO of deVere Group, advises caution. Green said: "This is a revival of the meme coin trend we saw in 2021 and 2022, where many young, inexperienced investors suffered losses due to extreme volatility. There is no doubt that investors will also suffer losses in this craze."
Green pointed out the speculative nature of meme coins and warned that their value could fluctuate dramatically. He clarified that while some might make substantial profits, this type of investment is inherently high-risk and unpredictable. He stated: "Let's be very clear: this is more like gambling than investing. If you're considering getting involved, you first need to have a sensible, diversified long-term plan."
The rapid rise of $TRUMP highlights the risks associated with meme coins, which are less influenced by fundamentals and more driven by social media hype. Green likened this phenomenon to gambling, noting that many day traders might join in, hoping to capitalize on the fear of missing out (FOMO).
He said: "Most of them are not buying because they believe the coin has intrinsic value. They are buying because they hope others will drive up the price, allowing them to profit from selling."
Green emphasized that this strategy comes with significant risks, and the valuation of meme coins can fluctuate dramatically. He added: "Understand the real risks your money is facing. This is different from investing in stable assets. Gambling is not the same as investing."
Despite the buzz $TRUMP has generated, this release may signal that the upcoming Trump administration will be crypto-friendly.
Some speculate that Trump's move into digital assets aligns with his government's potentially favorable stance on cryptocurrencies, which could further drive adoption and innovation in the sector.
Green is optimistic about the broader impact on the crypto market, stating that governments supporting cryptocurrencies could accelerate the adoption of digital currencies and blockchain technology.
He said: "In the long run, this will be beneficial for the economy. But it's important to distinguish between speculative meme coins and legitimate digital assets that offer real value and utility. If you do want to pursue the thrill of high returns or novelty, make sure it's part of a diversified strategy, not your main plan."
As the market reacts to this latest development, the rapid rise of $TRUMP highlights a broader debate about the role of cryptocurrencies in the current financial landscape.
Green concluded: "Trump's presidency is expected to usher in an era of cryptocurrency-friendly policies, although this may pave the way for legitimate growth of established assets like Bitcoin, it also raises concerns about the risks of speculative trading driven by social media hype."
