Trump appears to have made Meme Coins Great Again: But you still should not invest in them!

After a couple of years out of the spotlight, Meme coins are back in focus once more. There had been hope Trump would be more laisse-fair on crypto simply due to his pick for SEC boss. Well, he’s been even more pro-crypto than expected as he launched his own cryptocurrency called TRUMP.

What happened next is best described by TIME journalist Andrew Chow. ‘Trump’s fans and opportunistic day traders have generated billions of dollars in sales, driven by loyalty, hype, and the chance to make a quick buck,’ he said. ‘All of these trades have made the coin’s creators – affiliate companies of the Trump organisation – billions of dollars on paper’. Within a couple of days, it was the 25th most valuable cryptocurrency in the world, although it had fallen from its $75 high to $43.

The perfect time to look at meme coins, if ever there was one.

What are meme coins?

Meme Coins are a type of cryptocurrency that are typically created as a joke or a fun project, often inspired by internet culture, memes, or viral trends. They usually don’t have any significant technological or financial backing, and their value is mostly driven by social media buzz, online communities, and viral marketing.

Why Are Meme Coins Popular?

As we showed above, meme coins often gain popularity through passionate online communities that rally around them. These communities create viral content, jokes, and memes that spread quickly, which can drive up the coin’s price as more people buy in.

Some other notable meme coins, like Dogecoin and Shiba Inu, have gained widespread attention due to online endorsements, celebrity mentions (like Elon Musk), and being part of viral trends. Their low entry price (to start) with can make them more attractive than bitcoin. This can lead to the misconception that they have the potential for massive returns, even though the underlying fundamentals are often weak.

FOMO (Fear of Missing Out) has a part too. As meme coins gain attention and see large price fluctuations, many people rush to buy them out of fear of missing out on potential gains. This behaviour can lead to rapid price increases, which further fuels hype and speculation.

The lack of regulation plays a part too. Meme coins often thrive in a loosely regulated space, where speculation and hype can drive prices up without much oversight. Even if theoretically laws like insider trading may apply to meme coins, their enforcement is pretty lax…if at all existant. This environment can attract investors looking for high-risk, high-reward opportunities.

Are Meme Coins Too Risky to Invest In?

Yes, meme coins are generally considered very risky investments. Not just because they are cryptocurrencies – they even riskier than established cryptocurrencies. ‘Established cryptocurrencies’ like Bitcoin, Ethereum at least have underlying technology or real-world use cases even if their value is driven by investor perception and nothing else…no less than meme coins.

Moreover, many meme coins have been associated with “pump-and-dump” schemes, where the price is artificially inflated through coordinated efforts by early investors or influencers, and then quickly sold off, leaving latecomers with significant losses. Remember the ‘rug pulls’ in the late 2010s? These were Initial Coin Offerings (ICOs), think an IPO but with a crypto rather than an actual company. Developers raised a lot of money then ran away with it. The risk today is no less than it was back then.

How you think it'll go vs. How it goes
byu/Spiritual_Use_5970 inwallstreetbets

Even if meme coin makers won’t just take the money and run, they can be manipulated by large holders or creators. If a coin becomes widely known but lacks solid backing, those who own large amounts (often called “whales”) can sell off their holdings when the price reaches a peak, causing the value to crash. This leaves small investors with heavy losses.

Is There Any Potential for Profit?

It is possible to make money with meme coins if you buy at the right time (before the hype peaks) and sell when the price rises. Some early adopters of popular meme coins like Dogecoin or Shiba Inu made significant profits, but these are outliers, not the norm.

However, the vast majority of meme coins will likely fail or fade away over time, and many investors will lose money. Investing in meme coins is more akin to speculative gambling than traditional investing.

Conclusion

Meme coins can be fun to follow or speculate on, but they are highly risky investments due to their lack of real-world utility, extreme volatility, and reliance on social media and hype. No matter how much you might like Trump, even a successful presidency could see his new crypto fall – perhaps just because investors move on to the next thing.

Unless you’re willing to accept the possibility of losing everything you invest (yes everything), they should be approached with caution. For long-term investors, it is generally better to focus on projects with solid technology, use cases, and proven development teams rather than coins driven solely by trends and memes.

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