By Ian Salisbury

President Trump's meme coin is getting a lot of attention, just as cryptocurrency seems poised to enter many mainstream investment portfolios. It may remind investors why they stayed away in the first place.

The crypto industry has high hopes for the new Trump administration. Trump has said he wants to make the U.S. the " crypto capital of the planet" and promised a far lighter regulatory touch than under President Biden. Meanwhile, new investment vehicles such as spot Bitcoin exchange-traded funds have helped rekindle interest, helping send Bitcoin's price above $100,000 for the first time in November. Late Thursday, Bitcoin was at $104,800, just below its record high of $109,115.

But crypto fans may have gotten more than they bargained for when Trump and his wife, Melania, launched a pair of meme coins last week. The tokens, $TRUMP and $MELANIA, quickly shot up in value. The $TRUMP token's market value briefly hit $15 billion within hours of its launch on Jan. 17.

Prices for the token -- like other meme coins, it has no cash flows or easily defined business purpose -- have been volatile. When the Trump team followed up with a copycat $MELANIA coin a day later, the Trump coin's value plunged by more than 40%.

Today, $TRUMP has a market value of around $7.1 billion, ranking third among meme coins after Dogecoin and Shiba Inu, according to CoinMarketCap, a website that tracks crypto prices. $MELANIA, ranked 17th, has a market value of around $350 million.

Those figures are only for the value of the "circulating supply" of the coins. It is worth noting that only a fraction of the total amount of the coins is available for trading. The rest appears to be owned by the Trumps.

The Wall Street Journal recently put the value of the president's stake at $30 billion, while noting that number is only theoretical. It said that any attempt to sell the hoard of coins would likely further tank their value.

It isn't bad for a week's work -- except that plenty of crypto fans have expressed doubts. "We have pretty much stayed away from meme coins," said Cathie Wood, manager of the popular tech-focused ARK Innovation ETF, when asked if she would buy the coin on Bloomberg TV. "Is it going to have any utility? We shall see."

The White House didn't immediately respond to an email from Barron's seeking comment. Asked about the coin at a recent press conference, Trump seemed to manage only a halfhearted response. "I don't know much about it, other than that I launched it." he said. "I heard it was successful."

The coins come at an important moment in cryptocurrencies' bid to go mainstream. For years, the industry has struggled to rekindle the sense of excitement and magic of the early 2020s, when Bitcoin's market value first hit $1 trillion. While crypto never went away, declining prices and scandals such as the implosion of Sam Bankman-Fried's FTX exchange sapped public interest.

Now, the new Trump administration promises to create a second golden era for crypto. While the Biden administration took a cautious approach, Mark Uyeda, whom Trump named acting head of the Securities and Exchange Commission on Tuesday, immediately promised to launch a crypto task force led by Commissioner Hester Peirce, one of the agency's biggest crypto defenders.

Under Trump, investors can also look forward to a slew of crypto-focused exchange-traded funds, following the popularity of spot Bitcoin ETFs, which launched in early 2024. Proposals for funds that own XRP, Solana, Hedera. and Litecoin are all before the SEC.

What is more, crypto may also be at an inflection point in terms of acceptance among everyday investors, who have been slow to add it to traditional portfolios alongside stocks and bonds. Mainstream wealth managers such as Wells Fargo, Bank of America, and Morgan Stanley allow financial advisors to add Bitcoin to portfolios when clients ask for it.

This week, BlackRock CEO Larry Fink even suggested Bitcoin's price could hit $700,000 if investors around the world started devoting a small sliver of their portfolios to the coin, something BlackRock itself has recommended. BlackRock, which oversees the market's largest Bitcoin ETF, would be a prime beneficiary.

Amid all this reason for optimism, it isn't hard to see why Trump's meme coins generate mixed feelings. They remind investors not just of crypto's promise, but its susceptibility to hype and manipulation.

Haseeb Qureshi, managing partner at crypto fund Dragonfly, described the feelings among crypto fans on the Chopping Block podcast Wednesday. Initial reactions were mixed, he said, with some perceiving $TRUMP as "grifty" but others regarding it as a fun "homage to Trump."

But the feeling curdled when Trump tweeted about the follow-on launch of $MELANIA. "Everybody hated this," Qureshi said. "This was like, 'Oh, Trump sees crypto and meme coins like for-profit universities and steak knives and casinos. This is just another way to monetize the Trump family name'...The pall that it has put over crypto is now pretty clear."

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 24, 2025 03:30 ET (08:30 GMT)

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