More than 813,000 investors who rushed to buy President Donald Trump’s recently launched memecoin, $TRUMP, have collectively faced losses amounting to $2 billion. This downturn has raised alarms among investors and financial analysts, revealing a stark contrast between the fortunes of the ordinary investors and those affiliated with the Trump Organization.
Following its introduction on January 17, 2024, $TRUMP reached an initial peak valuation of $75 per share. However, just weeks later, the value has plummeted to approximately $16, leading many holders to question the viability of their investments.
While everyday investors have seen their portfolios coming down, the Trump Organization and its associates have reportedly profited significantly from trading fees—amassing a staggering $100 million in just a few weeks. This discrepancy highlights an unsettling pattern of wealth accumulation for those at the helm while everyday investors face financial losses.
A total of 813,294 cryptocurrency wallets experienced losses from their holdings of $TRUMP meme token shares within the 19 days following its launch, based on an analysis by cryptocurrency forensics company Chainalysis commissioned by the New York Times. The total losses amounted to approximately $2 billion, resulting from users either retaining their shares as the value declined or selling them at a loss. This rapid devaluation underscores a turbulent beginning for the digital asset associated with the former president.
Despite the site associated with the memecoin emphasizing that purchases should be seen as a means of supporting the president rather than a strategic investment, many traders plunged into the market, lured by the promise of quick profits. The fervor peaked on the first day of trading when one enthusiastic investor acquired nearly 6 million tokens at a mere 18 cents each, signaling the initial speculative excitement surrounding the cryptocurrency.
Critics are questioning the ethics of leveraging popularity and celebrity status to promote such speculative ventures, especially given the notable cautionary disclaimer provided by the Trump meme website.
“There’s definitely a major red flag for investors,” said Leonard Kostovetsky, an associate professor of finance at Baruch College’s Zicklin School of Business, in an interview with Fortune last month. “All of these memecoins lack any intrinsic value beyond what others are willing to pay for them. They are purely bubbles.”
Timothy Massad, a former commissioner of the Commodity Futures Trading Commission and a senior fellow at Harvard, suggested that countries and companies might attempt to gain favor with the Trump administration by investing in shares of his memecoin.
“This was clearly a bad and inappropriate action,” he remarked in a January interview with CNBC. “You don’t need to be a crypto expert to recognize that the Trump Organization exploited the upcoming inauguration for profit. This not only posed a conflict at the time but could also lead to future conflicts.”
Donald Trump Jr., the executive vice president of the Trump Organization, did not reply to Fortune’s request for comments.
This article was originally published on Fortune.com.
