By Terry Ashton, updated February 18, 2025
Some cryptocurrencies can do things in the real world, but meme coins are a niche “in which the asset offered typically doesn’t have much intrinsic value”, in the words of Bloomberg. It would follow that, in the event that financial conditions tightened, these tokens might be the first things to get dumped.
President Donald Trump wasn’t concerned about this prospect when he launched his own meme coin called $TRUMP on January 17th, and then another one named MELANIA two days later. Both new tokens were to find a home on the Solana blockchain, and this fact duly pushed that blockchain’s native SOL coin to its highest ever price level on the 19th of the month. The first of Trump’s two tokens traced a strongly bullish path from less than $10 on the morning after the launch to $74.59, after which it shed some of its gains.
And then, as February arrived, Trump slapped 25% tariffs on imports coming into the US from her two neighbours – Mexico and Canada – plus a 10% duty on goods entering from China. Traders reacted by worrying that the effect would be inflationary, which would slow down the cycle of central bank interest rate cuts and put the brakes on economic growth. Their response was to sell off risk assets, and this included Bitcoin which slipped to its lowest level in three weeks on February 3rd. As to Ether, it tanked with 24% losses.
Were Trump’s two projects – the meme coins and the import tariffs – then, contradictory? And do his new tokens have a bright future in cryptocurrency trading? Join us for some answers.
The Launch
On January 17th, President Trump posted his intentions to launch $TRUMP on his TruthSocial social media platform. Interest was quick in gathering, with one individual buying 5.9 million tokens after only 90 seconds. In fact, in the hours following the launch, there were only 21 crypto wallets engaging in most of the cryptocurrency trading, driving prices skyward in a hurry. How was it possible for crypto traders to jump so stealthily onto this bandwagon? Dragonfly’s Rob Hadick answers that the secret to their success could have been “automated trading bots that… buy new token launches early if the token fits a certain criterion… and then sell” when a designated price level is reached.
One unusual thing about Trump’s new coin is the fact that two of his own firms – CIC Digital and Fight Fight Fight LLC – own 80% the supply. For Shuyao Kong of MegaETH, this is “completely abnormal” because “meme coins take pride in fair launch, meaning no insiders were able to acquire tokens before launch”. Putting aside the question of abnormality, a potential problem with this setup is that, in the event Trump’s companies sell off their coins at some point in the future, this could be heavily bearish for the token’s prices.
People like Matthew Dibb of Astronaut Capital called the meme launch a “sell-the-news event” and, indeed, by the final day of January, $TRUMP had lost 60% from its peak. On the other hand, there were still about 700,000 wallets holding the coin and it had clawed its way into the ranks of the top 40 crypto tokens by market value. It’s too early to tell the future of $TRUMP, but lots of people will be waiting to see.
Is Bitcoin Going to Keep Rising?
We mentioned that both Bitcoin and Ether suffered as a result of the president’s new import tariffs at the start of February. But is this the beginning of a longer-term downturn for Bitcoin, or just a temporary hiccup? JP Morgan believe the latter is true. Even after surging 120% in the twelve months preceding mid-January, Bitcoin still has room to run further, in those analysts’ view. And, yes, they mean specifically Bitcoin and not the altcoins.
Resisting the suggestion of other analysts that 2025 could be the year of the altcoin, JP Morgan mention several factors in support of their position. While in 2021, the Bitcoin rally in cryptocurrency trading was fueled by token issuance, the market has evolved since then and now demands proof of real-life blockchain usability. “In this model”, they write, “profits from successful projects often benefit private corporations, diverting value from crypto tokens”. Bitcoin, by contrast, is a proxy for the market itself. And, since developers are working on improving Bitcoin’s own functionality, for instance in the making of smart contracts, it stands to receive the lion’s share of the cash inflows.
As to the established practical usability of the Ethereum blockchain, which would seem to position it to reap some of those fruits, JP Morgan aren’t so sure about this. The way they see it, since Ethereum is a public, not a private, blockchain, it may end up being marginalized. This is especially possible since the shape and form of US regulatory policy on the sector is so far unknown, and that policy may not promote the decentralized finance applications for which Ethereum is famous. Although there may be exciting altcoin projects currently planted on foreign blockchains, these have not yet proven themselves in the market’s eyes. If they do end up succeeding, it will only be over time.
Finally, JP Morgan point to Bitcoin’s dominance in the area of spot crypto ETFs, where the largest cryptocurrency saw the inflow of $36.4 billion between January and December 2024. Compare this with the mere $2.4 billion that flowed into spot Ether ETFs between their July-2024 launch and mid-January 2025.
The Macro Backdrop
Since last September, the Federal Reserve has cut interest rates three times, helping to push digital assets higher. On their January 29th meeting, however, they paused due to sticky inflation staying close to 3%. Their concern was that rapid rate cuts could heat up price hikes again. Since it’s unclear when the Fed will continue on with their dovish program, does this spell bad news for Bitcoin and other digital assets? Not necessarily. Just after Fed chairman Jerome Powell made this announcement, he also made a few crypto-friendly statements. On the question of Wall Street banks dealing in cryptocurrencies, Powell remarked that “Banks are perfectly able to serve crypto customers as long as they can understand and service the risks”.
Under the previous US administration, crypto firms had protested about attempts to cut off their access to financial services, which hampered their operations. Since then, there has been some normalization of the asset class on Wall Street due to the emergence of BlackRock’s spot Bitcoin ETF. Powell’s statement in January signifies a desire to further integrate the crypto sector into the sphere of traditional finance, which is potentially very positive for the ecosystem.
If you ask Citibank, they’ll tell you the macroeconomic backdrop looks set to continue fostering risk assets through Q1 2025. After that, the outlook is unclear because we have yet to see the impact of the new president’s trade policies. With regard to spot Bitcoin ETFs, Citi see the inflows enduring into the new year. One bullish factor they mention is the steady issuance of stablecoins and their price upsurge since the election. This may imbue the market with health and confidence. “Widespread adoption of stablecoins with use-cases beyond crypto trading”, they write, “would likely be a driving factor of broader DeFi engagement”.
Wrapping Things Up
Returning to the first of our initial questions, we can now venture an answer: No, President Trump’s tariffs and meme coin projects do not contradict each other. For one thing, Trump does not expect the tariffs to be inflationary and, for another, many analysts view the path ahead for Bitcoin as rosy indeed, as we have seen. As to the future of $TRUMP and MELANIA, nobody knows what fate has in store for them.
Although Trump did not make any decisive actions on crypto in his first week of office, which disappointed some industry participants, he did order the formation of a special cryptocurrency review board, whose job will be to offer new legislation for the sector and explore the possibility of establishing a national cryptocurrency stockpile. With the passing of the weeks and months, the president may produce more concrete benefits for the sector.
On the immediate horizon, Maelstrom’s Arthur Hayes predicts Bitcoin will drop to approximately $75,000 and then continue pushing upwards bullishly. At the moment, the Securities and Exchange Commission (SEC) is reviewing several applications for the establishment of spot ETFs for altcoins like DOGE, XRP, and SOL. “If the SEC approves these, it will signal greater legitimacy for the digital asset industry and trigger more capital inflows”, in the opinion of Derive.xyz.
