Let's dive in to uncover the story behind the madness.

In this article, we will go over the following:

• How the $TRUMP launch happened
• The tokenomics of $TRUMP
• The impact it has on the market
• What this means for the $SOL ecosystem

Grab your cup of coffee, and let’s get started!

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Trump's memecoin frenzy: What happened?

On January 17th at 10:00 PM, a post was released from the almost inaugurated president, who said that he was launching his own memecoin. The coin skyrocketed by over 5,000% in just 24 hours. But the question remains: why would a former president venture into memecoins? Is this a calculated move to capitalize on crypto's popularity, or is there a deeper strategy at play?

Regardless of his intentions, it was one of the biggest wealth generation launches in the space, making fast traders life-changing money but also endangering the reputation of the crypto industry as a whole.

Tokenomics: A Red Flag?

The token is a memecoin launched on Solana, and several big players were involved in the launch, including Jupiter and Meteora. On further investigation, this coin seemed quite suspect to the more well-trained eye. This is because when looking at the bubble maps, something insane meets the eye.

Over 80% of the supply is held by the team. This is unheard of with many popular memecoins like WIF, POPCAT, or SPX, even having at most 10-15% of the supply controlled within one cluster. Why would a sitting president corner over 80% of a coin's supply? 

This meant two things: 1) The team was going to make millions/billions dumping on retail, and 2) the price could pump extremely hard due to the involvement of the president; he is the leader of the free world after all. But this also meant that more sophisticated investors were scared of entering due to the risk that too much supply was held by the team.

And they were right because the team ended up cashing out over half a billion dollars in profits from the launch while maintaining 80% holdings of the supply, all this while entering the top 10 crypto coins by fully diluted valuation.

Looking at the wallet of the team, we can also see that around the peak, it held over $10 billion worth of tokens. Following the success of this token’s launch, Trump's team decided to double down on memes, creating another one named after his wife $MELANIA. This completely changed everything, and with its release on January 19th, it marked what some are calling the forever top on $TRUMP.

Similar to $TRUMP, $MELANIA’s launch wasn’t mediocre either in terms of price or action. Upon launch, it rose a whopping 30,000% in just a few hours, once again making some very rich and punishing latecomers, as it had the same supply controls as $TRUMP.

But from here, the story gets much more bleak. Since the 19th, $TRUMP has been down over 50% in price. Essentially, wiping out gains for anyone who didn't but within the first 24 hours.

And from what we can tell, everything lines up with lower prices over time going forward, barring any big bull posts from the president.

But why do we have a bearish take on this? Well, this isn't the first project the president has launched… In fact, he has done about 3 NFT launches, all of which basically went to zero, and a coin launch that only recently sold out this week due to the $TRUMP coin's success. 

This also means there is a lot of dilution. As we saw in the NFT land, dilution over time typically means lower price trends for all related tokens, and with $MELANIA and $WLFI and the NFTs, we do not see a bullish narrative here.  Additionally, when we look at tokenomics, we can also see that after only 3 months, the team can begin unlocking more of their 80% token holdings and dumping them as they please. 

From the image below, we can see that no one from the $TRUMP team has received their allocations and unlocks starting in April and are able to be dumped and sold daily, which massively increases sell pressure in the long term.

Similarly, looking at $MILANIA, we can see the same predatory vesting on about 60% of the tokens going to the team. But this one is even funnier because the unlock will begin in less than 30 days on this one.

Overall, we can see that the tokenomics are quite bearish mid-to-long term for both coins, further strengthening the idea that long-term investments in these coins are not to be taken. Simply stay away from these assets unless you are a very good trader.

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How does it impact the market?

We think that the impact of this is a bit nuanced, especially with the launch of $MELANIA. On the one hand, it means the president is okay with extracting as much money as possible from the crypto space. We say this because supply-controlled launches like this benefit the team launching it the most, as when they hold so much supply, they win big when it comes to selling.

The team has already sold over ½ a billion dollars, meaning that is money that won't be coming back into space. Crypto, although popular, still struggles with liquidity, and we can see this as even when the $TRUMP coin launched, almost every alt and meme coin alike printed -20% candles at least.

The glass-half-full perspective of this is, of course, it shows that the President wants to play ball in crypto much more, especially on Solana itself, which we will dive deeper into in the next part of our article. This also gives crypto more recognition by people in the TradFi world. Even with the Blackrock ETFs, people are still quite unaware of crypto as a whole outside BTC, and even so, many have a sub 1% or 0% allocation to it. The launch of coins from the President himself puts way more eyes on the space.

That being said, it also opens the door for more grifting and extracting, and we definitely have seen that happen with many popular figures/products endorsing or “launching coins”, like John McAfee’s team and Vine. Overall, we do think this is bullish for raising the general interest of crypto in the non-crypto eyes, but it is very extractive and will lead to lower liquidity over time and attract even more grifting and extraction.

What does this mean for Solana?

On the one hand, the Solana blockchain has gained a significant spotlight as the "President's Choice." On the other hand, its recent congestion issues during $MELANIA's launch raise questions: Will Solana be scalable enough to accommodate a surge of new users, or will competitors like Hyperliquid or Base take over some of its market shares?

The market thinks it is net positive overall, as it is reflected in the SOL’s price. It also means that it is much more likely to get an ETF this year. In addition, the first lady even sent a personal message to Solana.

With the president and first lady launching their own meme coin, this shows that Solana is just the better, more normie-friendly chain VS Ethereum. As we have said in previous articles before, this is likely due to the cheapness, speed, and easier UIs than Ethereum. And looking at the chart below we can see that the ETH/SOL pair continues to weaken.

Another thing is this launch brought tons of new users to Solana. In fact, in a tweet by Chain analysis, we can see that almost 50% of the wallets who bought the coins were completely fresh wallets. Showing that this coin did in fact bring a whole new user base to crypto and onboarded many.

While this is quite bullish for Solana, it surprisingly performed quite poorly when the second coin, $MELANIA, dropped. It was very congested, with most having to pay over 0.5 SOL (over $100) in fees to get a transaction through, while many exchanges cancelled withdrawals to the Solana chain.

On the brighter side, we can also see how many more transactions have been happening on Solana since the launch of Trump memecoins. Over the week, Solana has eclipsed all the top 10 chains volume COMBINED. Undoubtedly, Solana is the chain that people want to degenerate and spend their time in versus the other options like Ethereum, Base, and Hyperliquid, to name a few.

Similar story with the stablecoin supply as well. The supply on Solana had more monthly stablecoin growth compared to Ethereum for the first time. Yeah, a lot of capital has flown into Solana after Trump.

Now, let’s look at the charts; the price benefited from the $TRUMP launch, with a 30% price jump within a day. Since then, the price has remained mostly bullish, making higher lows and, recently, a marginally higher high.

Overall, we believe this development has been overwhelmingly bullish for Solana. It has brought many more eyes to the chain itself, brought more users, and has significantly raised its chances of getting an ETF this year.

We can see this in the Polymarket data; since the 17th, the probability jumped up 20% and now settled around 15% higher. Although marginal, it does show that the market agrees with the sentiment.

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Cryptonary's take

So, what do we do from here?  With all this happening, it is easy to get lost in the sauce. Here is our take:

Firstly, we want to get it out of the way that we cannot in good conscience suggest buying either $TRUMP or $MELANIA for mid or long-term. With so much impending supply to be unlocked, some as soon as the coming week, we believe it is -EV to raise exposure to these coins. For the short-term trade, maybe, but buying and holding, we wouldn’t recommend it. 

That said, we do think that this is positive for the Solana and crypto landscape as a whole, as it has paved the way for memecoins, Solana, and other crypto tokens to have positive regulatory frameworks in the future.  Several memecoins have received an ETF filling after Trump as well.

It also shows that the President will be involved in crypto throughout his time in office which again keeps it in the spotlight – good for prices long term. Therefore, we maintain the stance that it is still a good time to allocate to crypto majors, as it is more than likely we will get overall positive news in the coming years. Let’s see where the market takes us…

Peace! Cryptonary, OUT!