$TRUMP: What happened and what it could mean for the future of crypto
Aaron Stanway
International US News Editor
On January 17th just a few days before inauguration $TRUMP was released onto the Solana blockchain. This was a first for official crypto tokens created by politicians. Within just 2 days, the value of $TRUMP skyrocketed to a total market capitalization of 14.5 billion dollars, marking the fastest rise in market cap for a crypto token to date.
In just a few days following the record breaking peak the total value of the token’s value reduced by two thirds. As of February 3rd the market cap of the coin is 3.56 billion, nearly 5x left than its original peak value.
The reason for the sudden drop in value has to do with how the tokens were distributed. At its peak, 80% of the supply was held by insiders leaving only 10% for liquidity and another 10 for investors. Experienced crypto traders will note that a token distribution such as this is a sure sign of a “rug pull”. Rug pull is a perfect way to describe what happened after January 19th where insiders started selling off their supply, increasing the public token pool and thus reducing the price. The over 10 billion dollar selloff likely net insiders each hundreds of millions and for some holders even over a billion dollars in capital gains.
This single act likely generated over a billion dollars for the president, more than the entirety of his campaign donations. This calls into question the effectiveness of crypto tokens as fundraising tools. Errol Musk’s “musk it” was released around the same period of time, a coin that was designed as a fundraising tool for Elon’s projects. Given the similarity in timing and strategy, the intention might be similar as well.
After reviewing what happened, it leaves the American population with more questions than answers. The first and most pressing is the question of legality and due to crypto’s currently unregulated state, it did not break any SEC regulations or federal laws.
Another question is if this sets a new precedent for how our leadership will use digital currency. On January 23rd, Trump signed Executive Order 14178 or “Strengthening American leadership in digital finance” where the main point of the order was to express a need for more government oversight into cryptocurrency and the possibility of a central bank cryptocurrency for the us. This could mean that this behavior will be discouraged by our leadership in the future, however Trump has still not made any public acknowledgment of the rug pull and the future of political rug pulls remains unclear.
Overall this event was unexpected by most Americans. As crypto tokens continue to move into the mainstream it is possible that we see them being used to fund future projects for private enterprises such as Errol Musk’s “musk it” coin, this technology may also carry over to the public sector as well. Given that these two coins were released at similar points in time, there may be some correlation between their intentions.
Contact Stanwaaa@shu.edu