Electing a pro-cryptocurrency president was more than most investors ever thought possible. Almost three months after the election, however, the initial euphoria is fading and turning to alarm for those who worry that President Trump’s own moves into crypto could be sowing the seeds of the next crypto winter. Just last month, Trump dropped the “only official Trump meme coin.” According to Chainalysis, nearly half of those who bought the token – or the Melania meme coin released the next day – were likely new investors who created their first crypto wallets the same day. But as much as investors look forward to a bull market capital injection, the industry is also trying to mature and distance itself from its online casino reputation, making allocation of new capital to projects with long-term utility and value all the more vital. Otherwise, today’s meme coin mania may well result in losses, discourage new crypto investors and hold back more valuable companies and developments. “It’s a money grab,” said Tyrone Ross, founder and president of registered investment advisor 401 Financial. “I wish a lot of this time and effort was spent on building out the technology and making it more accessible, but that gets farther and farther away with every announcement.” Coins questioned While companies like Coinbase Global and Robinhood Markets may benefit in the short run from the trading frenzy, JMP Citizens analyst Devin Ryan said meme coins aren’t an important part of a serious investable thesis. Instead, the opportunities come from coins’ ability to help people use blockchain technology in new ways, for example in staking , stablecoin utilization, integration with payments, web3 , the use of digital wallets and the tokenization of traditional financial assets. But those ambitions could get derailed. Only this week, Trump Media announced its latest push into crypto : TruthFi, a financial services division that will invest up to $250 million in exchange-traded funds, cryptocurrencies and other assets, and launch products and services, including its own investment vehicles, later this year. “People are going to be knocking each other over to get investment from them,” Ross said of TruthFi. “It’s just more products in the space, which is the last thing we need.” Since last summer, Trump’s companies have debuted two non-fungible token, or NFT , collections: Trump Digital Trading Cards on the Polygon blockchain and Trump Bitcoin Digital Trading Cards on the Bitcoin blockchain. A decentralized finance , or DeFi, platform called World Liberty Financial has also been launched on Ethereum. That company has since made major purchases of wrapped bitcoin (wBTC) , ether , Tron’s TRX , AAVE , Ethena’s ENA and Chainlink’s LINK . Trump’s influence is already affecting trading and investing trends. Last week, the Coinbase CEO posted on X that the company is having to rethink its listing process “given there are ~1 million tokens a week being created now, and growing.” Bitwise Asset Management has filed to launch an ETF tracking the price of the longest reigning meme coin, dogecoin , and Grayscale has introduced a dogecoin trust. There’s also a Trump meme coin ETF in the works. Ross argues that the flurry of announcements doesn’t “help move the space forward … It’s just a new casino.” Crypto has been through these crazes before (especially in 2017 and 2021) and has always bounced back to new heights. Blockchain setback The problem now is the industry has yet to prove to the wider world that blockchain technology is useful on a mass scale for anything other than speculative trading. And on the heels of a banner year for crypto — the start of trading in bitcoin ETFs a year ago was the flagship coin’s “IPO moment,” and the funds have seen strong institutional demand since — some view the current market as a setback to that progress. “There’s a dilution effect going on in the sense that there are so many of these [coins] being launched that it does make it harder for crypto projects to maintain value,” said Steven Lubka, head of private clients and family offices at Swan Bitcoin. That’s only serving to separate bitcoin from everything else digital. Historically, when bitcoin runs to new records, it lifts the rest of the crypto market. But altcoins have been struggling for months, even after the postelection bitcoin rally. “Bitcoin has impressively held above $100,000 [even] as most coins continue to give back the massive gains made in the last two months of 2024,” Wolfe Research analyst Rob Ginsberg wrote in a note last week. “While we reiterate that the longer-term direction of the space is up and to the right, the next few months are setting up to be more challenging. We would recommend trimming exposure to altcoins and parking it in bitcoin until near term trends improve.” Dilutive bear market Similarly, Lubka at Swan Bitcoin said altcoin investors have “basically been in a bear market” largely due to “rapid dilution.” “There are just constantly new things being pumped into the market, and traders and investors have been rotating very rapidly,” he said. “It’s been a very hostile environment.” But long-term investors focused on bitcoin only need not worry about the effect of these distractions on the price, Lubka added. “Not only does it not hurt bitcoin … it’s actually maybe positive for bitcoin,” he said. “The extent to which the crypto industry decides to throw itself upon this fate of just being meme coins and gambling … I think it’ll only drive more capital to bitcoin.” —CNBC’s Michael Bloom contributed reporting.
