Investing.com – The cryptocurrency market is in a buzz following the launch of Donald Trump's TRUMP coin, which has seen its value rise more than 11,000% since its launch on Friday. The coin reached a market cap of $66 billion by Sunday afternoon, marking Trump's bold entry into the digital asset and merchandise sales space ahead of his impending inauguration on Monday.
The Trump coin was announced on Truth Social late Friday and was presented as a commemoration of Trump's presidential election victory. The currency, which is based on the blockchain platform, started with a limited supply of 200 million coins. According to the coin's official website, the supply is expected to rise to 1 billion over the next three years.
Trump's dramatic price rise has created a lot of chatter, but Nigel Green, CEO of DeVere Group, advises caution. “This is a revival of the meme trend we saw in 2021 and 2022, where many young, inexperienced investors got burned by extreme volatility,” Green said. “No doubt, investors will be hurt by this madness as well.”
Green noted the speculative nature of memecoins and warned that their values could fluctuate significantly. He explained that although some can make significant profits, this type of investment is inherently high-risk and unpredictable. “Let's be very clear: This is more of a gamble than an investment,” he said. “If you're thinking about getting involved, you need to have a sound, diversified, long-term plan in place first.”
The rapid rise of the Trump coin highlights the risks associated with meme coins, which are influenced less by fundamentals and more by social media-driven hype. Green likened this phenomenon to gambling, noting that many day traders would likely join in, hoping to capitalize on the fear of missing out (FOMO). “They often don't buy because they believe the currency has inherent value,” he said. “They buy because they hope others will push the price higher, allowing them to sell at a profit.”
Green emphasized that this strategy comes with significant risks, and that meme coin valuations are likely to fluctuate significantly. He added: “Understand the real risks to your money. This is not the same as investing in sound assets. Gambling is not the same as investing.”
Despite the hype around the Trump dollar, the launch could signal a crypto-friendly approach by the incoming Trump administration. There is speculation that Trump's venture into digital assets is in line with his government's potentially positive stance on cryptocurrencies, which could lead to greater adoption and innovation in the sector.
Green remains positive about the broader implications for the cryptocurrency market, noting that a pro-crypto administration could accelerate the adoption of digital currencies and blockchain technology. “This will have long-term benefits for the economy,” he said. “But it is important to distinguish between speculative cryptocurrencies and legitimate digital assets that provide real value and utility. If you want the excitement or novelty of chasing big gains, make sure it is that.” Part of a diversification strategy, not your master plan.”
As the market responds to this latest development, Trump's rapid price rise highlights the broader debate about the role of cryptocurrencies in the current financial landscape. Green concluded: “A Trump presidency is expected to usher in an era of pro-crypto policies, and while this could pave the way for legitimate growth of established assets such as, it also raises questions about the risks of speculative trading driven by social media hype.”
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