The Official Trump (TRUMP) meme coin ignited a trading frenzy that saw billions in volume. Shortly after, First Lady Melania Trump unveiled her own meme coin, Official Melania (MELANIA), further fueling the digital currency buzz. However, both coins swiftly plummeted in value, with TRUMP and MELANIA down more than 50% and 80% from their peaks, respectively. But whales still play with them.
Chainalysis has highlighted significant differences in how TRUMP and MELANIA tokens are distributed and profited from.
While most holders of TRUMP are retail investors with small stakes, a concentrated group of large investors, known as whales, have gained considerably. Notably, about 50 wallets have reported profits exceeding $10 million each, demonstrating the power of early or high-volume participants.
Moreover, on-chain analyses from Chainalysis Reactor indicate that following the creation of 1 billion TRUMP tokens, four wallets acquired a substantial portion for direct holding or exchange liquidity. Despite these uneven distributions, retail investors form the majority of token holders.
As of January 21, typical TRUMP or MELANIA wallets held less than $100 in tokens, reflecting a broad yet limited retail interest. Of these holders, over 80% possess assets under $1,000 on the Solana blockchain, and half are new to Solana altcoins, having created wallets to invest in TRUMP or MELANIA specifically. Despite high retail engagement, gains are minor for most, with 77% of TRUMP holders seeing profits below $100. Meanwhile, whale dominance persists, as 40 wallets command over $10 million in TRUMP or MELANIA tokens, encompassing 94% of the total supply.
Despite their popularity, the launch of these tokens by the President and First Lady has drawn significant criticism. James Thurber, past director of the Center for Congressional and Presidential Studies, accused Trump of leveraging his cryptocurrency support for personal financial gain.
Speaking to the Guardian, Thurber commented on potential conflicts between Trump's business interests and crypto policies, suggesting Trump's motivations are profit-driven, aiming to secure a place among America's wealthiest. Furthermore, analysis by FinTAX underscores the legal, tax, and political risks facing the TRUMP meme coin. Notable issues include potential SEC scrutiny under the Howey Test, tax compliance complications given 80% token ownership, and the possibility of infringements on political finance regulations.
These concerns encompass potential security classification, tax challenges from unlocking tokens, and the disruption of traditional political donation practices.