The market capitalization of cryptocurrencies associated with former U.S. President Donald Trump has reportedly plummeted by approximately 19 trillion KRW (about 12.6 billion USD) over the past 15 months. Analysts attribute this sharp decline to mounting external risks, including the ongoing Middle East conflict and escalating U.S.-China trade tensions, which have dealt a severe blow to politically-themed digital assets.
As of 3:20 p.m. (South Korean time) on Thursday, CoinMarketCap data shows that the market cap of the Trump meme coin, OFFICIAL TRUMP (TRUMP), has nosedived by 92.6% to 66.43 million USD compared to January of last year. This represents a staggering 8.4 billion USD loss in just one year.
Notably, the coin’s market cap has continued its downward spiral since falling below 800 million USD following the U.S. airstrike on Iran in February.
World Liberty Financial (WLFI), a decentralized finance (DeFi) project linked to the Trump family, has also seen its market cap shrink by 62.9% to 2.838 billion USD during the same period, equating to a loss of about 4.8 billion USD.
The meme coin associated with former First Lady Melania Trump, MELANIA, has experienced an even more dramatic decline of 93.2% (around 1.5 billion USD) compared to January of last year, now standing at a mere 110.05 million USD.
The combined market cap losses for these three Trump-related cryptocurrencies alone have reached a staggering 12.7 billion USD over the past 15 months.
The precipitous decline in Trump-themed cryptocurrency valuations can be traced to shifting global macroeconomic conditions. Economic uncertainty has been on the rise since the latter half of last year due to U.S.-China trade frictions. This year, heightened military tensions in the Middle East have further exacerbated risk-averse sentiment towards speculative assets.
Cryptocurrencies are widely recognized as high-risk assets, particularly sensitive to external factors such as interest rates, liquidity conditions, and geopolitical risks. Within this volatile market, meme coins and politically-themed assets are especially prone to dramatic swings, as they tend to derive their value more from speculation and sentiment than from tangible profit models or intrinsic worth. Consequently, these assets often experience more severe downturns when market conditions deteriorate.
Indeed, early last year, Trump-themed cryptocurrencies attracted substantial investments, buoyed by expectations surrounding a potential second Trump administration and hopes for crypto-friendly policies. OFFICIAL TRUMP, for instance, saw its market cap soar past 9 billion USD just 48 hours after its launch. However, as macroeconomic uncertainties mounted, investors rapidly withdrew funds, triggering simultaneous drops in both price and market capitalization.
The Trump family has actively expanded its cryptocurrency ventures, including the operation of World Liberty Financial, the issuance of a stablecoin (USD1), and involvement in the mining project American Bitcoin. According to Japan’s Nihon Keizai Shimbun, the Trump family is estimated to have reaped over 10 billion USD in profits from these ventures last year alone. They’ve continued to garner market attention through partnerships with crypto exchanges, fundraising efforts, and strategic cryptocurrency acquisitions.
However, the stark contrast between the family’s business expansion and revenue generation and the plummeting market caps of related cryptocurrencies has raised eyebrows among investors. The inherent volatility of meme coins, coupled with recent statements surrounding U.S.-Iran tensions, has further amplified market instability.
Trump’s own statements have also contributed to market volatility. On Wednesday, he hinted at the possibility of U.S. forces leaving Iran within two to three weeks, suggesting a potential end to hostilities. He also claimed on Truth Social that Iran’s new government had requested a ceasefire with the U.S.
However, Iranian officials swiftly denounced these claims as baseless, further fueling uncertainty. In a speech on Thursday, Trump escalated tensions by asserting that the U.S. has multiple options to strike Iran’s oil facilities, including seizing control of key energy infrastructure, potentially within the next two to three weeks.
The outlook remains highly uncertain. With macro variables such as the Middle East situation and U.S.-China relations still in flux, analysts predict that related cryptocurrencies are likely to experience continued high volatility in the near term.
Russell Chesler, head of investments and capital markets at VanEck, noted that the market did not respond positively to Trump’s recent speech. He emphasized that investors’ primary concern revolves around the timeline for ending the conflict.
Chesler added that prevailing uncertainty is driving market volatility, and suggested that the market appears to be heading towards a stagflationary phase, characterized by simultaneous economic growth slowdown and rising inflation expectations.
