The 2024 US Presidential election, which resulted in Donald Trump’s win, has suddenly propelled cryptocurrencies to unprecedented highs as the sector has been buoyed by the prospect that America will now fully embrace digital assets and regulators will change their tone about them.
One sector of the crypto space that benefitted tremendously from Trump’s victory involves meme coins – cryptocurrencies created as jokes or parodies that manage to attract a loyal fan and investor base.
Leading the charge among the most valuable of these tokens we find Dogecoin (DOGE), a dog-themed cryptocurrency that notable characters like Elon Musk have endorsed on multiple occasions.
DOGE has jumped to the leaderboard in terms of market capitalization and currently ranks as the 6th most valuable token. Data from CoinMarketCap shows that DOGE has accumulated a 117% gain in the past 7 days while its value has surged by an eye-popping 353% since the year started.
The sudden spike in Dogecoin’s price came shortly after President-elect Trump stated that the CEO of Tesla (TSLA) Elon Musk and former Republican presidential candidate Vivek Ramaswamy would head a newly formed government efficiency commission.
Musk quickly took to his social media platform X and named the initiative – the Department of Government Efficiency or D.O.G.E.
Ethereum’s PEPE and Solana’s WIF Reach New Highs
However, Dogecoin is not the only meme coin benefiting from this post-election crypto rally. The Ethereum-based token Pepe (PEPE) leaped to an all-time this week and saw its market cap skyrocket to $9 billion while the Solana-based token Dogwifhat (WIF) saw its aggregated value increase to $4 billion on short notice.
Both PEPE and WIF are posting 24-hour gains of 19% and 21%, respectively, thus far this morning while their value has experienced a 114% and 76% increase in the past week alone as the two were listed by Robinhood and Binance – two of the most influential crypto exchanges in the world.
Their stellar growth is prompting investors to eagerly scout for the next potential “moonshot” as thousands, if not millions, can be made with the right trade in these conditions.
Meanwhile, a newcomer is also grabbing headlines this week. Its name is Peanut the Squirrel (PNUT). This is a Solana-based token minted through the popular Pump.fun protocol that has captured investors’ attention amid its remarkable performance. The coin is a reference to an OnlyFans creator’s pet squirrel Peanut, who was put down by authorities to be tested for rabies after biting an agent.
For PNut https://t.co/v9lr3UxpVC
— Elon Musk (@elonmusk) November 5, 2024
Once again, one Elon Musk public comment can be linked to PNUT’s surge as the head of SpaceX published an X post that almost explicitly endorsed the meme coin.
Musk, who has long been a vocal supporter of Dogecoin, used PNUT in an X post to encourage people to vote on Election Day. The SpaceX CEO also stated on Tuesday that “America was saved by a squirrel and a meme coin.”
Data from CoinMarketCap shows that PNUT’s market cap has been propelled to nearly $1.8 billion in just three days resulting in gains that exceed 1,500% during this short period. Meanwhile, the token’s 24-hour volume exceeds its market cap by nearly three times as it currently stands at $4.5 billion.
Retail Investors Shun VC-Backed Tokens
Investors may be lured to meme coins as their value is typically built not by venture capital investments but rather by the support of a growing community of individuals.
According to Keyu Liu, an investor at crypto prop investment firm Primitive Ventures, retail traders are “tired of playing cards on VC’s table and want a fairer table that they themselves create.”
Also read: Dogecoin Doubles Following Trump’s Win – How High Can It Go?
This perspective is backed by the numbers as meme coins have surged by an average of 342% in the past year according to data from the blockchain analytics firm Artemis. During this same period, tokens backed by VC capital have seen their value decline.
“At the end of the day, most VC coins [are] basically memes, they are trying to build a narrative and community around it,” Liu said. “Retails started to realize that and instead of getting into these ‘VC meme coins’ at 10x higher [valuation] than VC in the private round, they might just bid meme [because] they could get in early.”
The Impact of Trump’s D.O.G.E. Department
While Toe Bautista, a research analyst at crypto market maker GSR, is hesitant to correlate the new department directly with the recent surge in the value of meme coins, he acknowledges that it likely benefits Dogecoin in the short term.
Bautista draws a parallel between the D.O.G.E. announcement and Elon Musk’s appearance on Saturday Night Live in May 2021, during which he discussed Dogecoin.
“While this could create a more dynamic storyline for DOGE, as Trump’s Department of Government Efficiency may get more airtime over time, this feels reminiscent of Elon’s SNL Doge moment and is likely the most substantial catalyst DOGE could leverage in the near term,” Bautista wrote.
Binance’s listing of various meme coins is also linked to the latest increase in the value of these assets. Tokens like MOODENG, WIF, POPCAT, and NEIRO all saw triple-digit increases shortly after they made their debut in what is arguably the world’s largest crypto exchange.
Most of these meme coins live on the Solana blockchain (60%) while roughly a quarter have been minted on Ethereum. Meanwhile, the Base and Binance BNB Smart Chain have also served as the go-to infrastructure for a handful of tokens.
The Risks of Investing in Meme Coins
While the post-election meme coin frenzy has produced substantial gains for some investors, this spectacular surge once again brings to the table the inherent risks that come with investing in the crypto space.
Critics have raised concerns about the potential for “pump and dump” schemes being promoted heavily to take advantage of this bull market.
Insiders typically take advantage of these positive market conditions to mint new assets and inflate their prices artificially before dumping their holdings on unwary investors who are left holding a worthless bag of digital assets once the dust settles.
Leonidas, the co-founder of the Bitcoin Ordinals explorer Ord.io, has initiated a petition challenging Binance’s listing strategy for meme coins, claiming that the exchange’s practices are promoting these types of manipulative schemes.
Leonidas argued that Binance is “specifically targeting low cap ‘dead’ meme coins that are controlled by a small number of insiders” because these tokens are able to pay the largest percentage of their supply as a listing fee, which Binance then “dumps to generate revenue.”
Startup investor Tina Dai echoed these concerns, stating that the “meme coin supercycle is a sign that people want to get rich quick. There’s a lot more FOMO to losing out on a 1000x gain on a meme coin than a 10x gain on a real project.”
She also suggested that there may be an “information asymmetry with a VC coin, so the upside is handicapped” compared to meme tokens.
What The Future Holds for Meme Coins in the Trump Era?
As the cryptocurrency market continues to respond to the political and regulatory shifts that Donald Trump’s presidency should supposedly bring, the future of meme coins remains a question mark.
While the current surge in prices and exchange listings suggests that the meme coin mania is far from over, the long-term sustainability of this speculative bubble is yet to be determined.
The potential changes in leadership at the US Securities and Exchange Commission, which possibly includes the resignation of its Chairman Gary Gensler, could create a more favorable environment for the proliferation of digital assets.
However, the risks of market manipulation and investor losses remain a significant concern that policymakers and regulators will likely address.
Ultimately, the latest meme coin rally once again highlights the power that retail investors wield to drive market trends.