Trump meme coins are a disaster in waiting

As a European he does not have BitcoinI enjoy gloating a little when… Cryptocurrency The industry is really upset about something. The latest wave of outrage is a mess: Crypto elites who saw Donald Trump as the savior of cryptocurrencies are now upset by his latest Trump-branded multibillion-dollar scam. Meme coin sale. Investor Ari Paul described it as “robbing people for billions.” Anthony Scaramucci, a former Trump aide, said that what happened was “corruption” at the level of a dictator; Balaji Srinavasan, former CEO of Coinbase Global Inc., described it as a “lottery” without creating wealth.Of course, they’re right to take a dim view of the Trump meme’s mix of naked money grabbing, MAGA culture and pump-and-dump economics. This is a man convicted of fraud whose idea of ​​announcing before the eleventh hour before being sworn in as the most powerful person in the world was to promote flogging 20% ​​worthless token currency, minting billions out of nothing and leaving the world. The remaining 80% were sat by insiders. And Melania’s subsequent symbolic launch – which coincided with a drop in her husband’s currency – doesn’t look much better. If alarming price fluctuations no longer scare us, conflicts of interest and cynicism should. What prevents foreign powers from taking advantage of this graft to reduce the risks of tariffs?

However, the crypto world’s turn against Trump perhaps signals a deeper concern about the sustainability of the broader digital asset rally, which has seen the price of Bitcoin rise more than 160% in one year amid broader institutional support from companies like BlackRock and Promises. Of the friendliest organization. Beneath the surface, speculative fervor for meme coins has been building for a while, with the squirrel-themed token PNUT reaching a market capitalization of $1 billion last year, and Hawkgirl Tuah launching her own coin (with disastrous results). A crypto lemon squeeze could be the moment when the entire market seems frothy like in 2017 when cash flowed in risky initial coin offerings or in 2022 when non-fungible tokens brought in millions. Bitcoin may aspire to become digital gold, but the recent crash saw it fall 67% in one year.

It’s also fitting that crypto elites suddenly showed interest in the average gambler when the Trump campaign showed little interest in prioritizing financial stability or consumer protection. Was the President’s repeated sale of NFTs not proof enough? Or his support for government HODLing Bitcoin, which would put taxpayers on the hook for assets that have been around for less time than Pokemon cards? Or indeed the promise of friendlier regulation just as the courts pick up the wreckage of Terra’s $40 billion collapse in 2022? Trump’s position has always indicated greater convergence between traditional finance and cryptocurrencies, regardless of volatility. Given the interconnectedness of cryptocurrency markets and the impact of leverage on asset prices that can collapse or rise, this means more systemic risk – and greater potential crises.

Whatever one’s view on the value of cryptocurrencies – and even hardcore crypto skeptics must admit that Bitcoin is still in the black despite the lack of daily use cases – something at this moment feels like a story that is not going to end well. Beyond the threat posed by Trump’s personal conflicts and the fact that his supporters may be cheated, the ultimate risk is a monetary system so inundated with bad money that it shuts out the good money. “The president and the administration pushing these reckless ideas could decide, just as recklessly, that they want to interfere with responsible management (of the Fed),” says Barry Eichengreen, an economist at the University of California, Berkeley. “If they did, it would pose a real danger to the dollar’s ​​international role.” Let’s hope someone hides the coin matching box soon.