Trump Meme Coin And The Insanity Of Crypto Valuations

Sagar Roy

With the recent ‘correction’ in the Indian stock market, where the Nifty 50 indices fell from the 26,000 level (it’s peak which it reached in end of September 2024) to below 23,000, there was a rise of mainstream discussions about fancy terminologies like Market Valuation, High PE (Price Earnings ratio) and even speculation about market “bubble”. However, in these discussions one market that has hitherto evaded scrutiny (especially in the Indian context) is the cryptocurrency markets. Among its strangest phenomena are meme coins, whose valuations defy economic fundamentals and reveal the growing disconnect between hype and reality.

Meme coins, unlike established cryptocurrencies like Bitcoin and Ethereum, are sentiment driven digital tokens with no underlying utility. Their value hinges on community hype, social media endorsements, and speculative mania.

A few years back headlines even in Indian media were dominated by meme coins such as ‘doge’ and ‘shiba inu’ but since then it has largely been ignored. While established cryptocurrencies like Bitcoin, Ethereum, and Solana have a semblance of legitimacy due to their underlying use cases—such as enabling smart contracts or decentralized finance—meme coins exist in an entirely different realm. For instance, Dogecoin commands a valuation of $55 Billion and is actually the 7th biggest cryptocurrency by market cap while Shiba Inu ranks 14th.

When the price of an asset soars far beyond its intrinsic or fundamental value, it is traditionally termed a bubble. But how do you characterize an asset with no intrinsic value at all?

The Trump Coin Frenzy

Yesterday (18th January 8 AM IST), U.S. President-elect Donald Trump introduced his own cryptocurrency, duped as the “Official Trump Coin,” in a tweet that instantly set the crypto world abuzz along with regular populous who follow Trump. Marketed as a meme coin, it took less than 24 hours for the coin to reach an astronomical valuation of $75 billion. Yes, billion—with a B.

What’s interesting is that the coin was deployed on the Solana blockchain; the valuation of the Solana coin is only around $150B. So a trump coin in one night is worth 1 /2 of the blockchain currency, which literally runs the whole system. What is Even more bizarre is that before this coin trump net worth is only estimated at around $6 Billion, less than 1/10 th of the trump coin fully diluted valuation.

To put this valuation in perspective, the market cap of Trump Coin is already valued at more than the Mcap of General Motors ($54B), one of the largest automobile manufacturers in the United States. Zooming into an Indian context, the coin’s valuation is almost a third of Reliance Industries’ market capitalization—a company that stands as a pillar of the Indian stock market and constitutes around 10% of the Nifty Index with a $200-225 billion market cap and a top-line revenue of $120 billion.

This stark contrast between a conglomerate built on decades of innovation and contribution to real-world economic growth, and a meme coins that generates value seemingly out of thin air, raises uncomfortable questions about market rationality and the idiom of ‘market is king’.

If this was not enough, Trump’s wife Melania launched her own meme coin called the ‘official’ Melania coin within 2 days of the first Trump meme. Initial people even in crypto community believed that her X account was compromised but after a few hours this announcement was retweeted by Trumps official X handle, and within few mins the Trump meme coin lost 50% of its value. Even after this tremendous drop the coin still trades around 35-40B in valuation, which is still insanely high for something which produces nothing.

The Gambling Culture

These insane valuations and investment pouring in from your average joe are possibly a result of a generation which wants quick results with a zepto fast delivery speed and meme coin, with their insane overnight valuations, hold a unique appeal in the minds of many—a sentiment rooted in the promise of freedom and financial independence.

These coins, capable of meteoric rises of up to 10,000% in a single night, offer hope to those who believe they’ve missed out on past opportunities, like buying 100 of Bitcoins a decade ago. For this crowd, memes coins represent a shot at generational wealth—an escape from financial constraints with just one or two lucky trades they hope or rather truly believe they will ‘make It’.

Unlike the stock market, where wealth generation typically unfolds over years, memecoins offer the allure of instant success. This instant gratification often attracts those who view traditional investment vehicles as slow or unattainable. Social media and influencers are also to blame for this perception creation. The phenomenon can even be seen as a form of revenge trading—a chance to reclaim missed opportunities or prove that financial success isn’t confined to the wealthy or well-connected, even though most evidence suggests otherwise- THE HOUSE ALWAYS WINS.

Consider this: a platform called Pump.fun, hosted on the Solana blockchain, allows users to easily deploy their own meme coins and also buy and sell them online in seconds. 10 of thousands of tokens are launched on Pump.fun almost every day out of which rarely 20-30 makes a million-dollar valuation, statistically the odds are insanely against any investor/gambler. Moreover, Despite the crypto memes coin market cap declining by $40 billion last December, Pump.fun managed to generate an astounding $400 million in revenue which has shown a pretty much upward trajectory. This illustrates the growing trend of gambling among crypto users, who are increasingly drawn to high-risk, high-reward opportunities.

However, this gambling culture comes at a cost. While a few early ‘insiders’ with prior information than the average joe, or the ones with large capital, may strike it rich, the majority are left bearing the losses, often losing significant sums of money. This dynamic also fuels a troubling trend of wealth concentration, as the gains from these speculative markets are disproportionately captured by platforms, ‘crypto whales’, and influencers driving the hype.

Value Created Out of Thin Air

The rise of Trump Coin is emblematic of the speculative frenzy that defines the cryptocurrency market. In a matter of hours, billions of dollars in perceived value were created—not through production, innovation, or even any semblance of any ‘idea’ which may lead to some form of capital formation, but through sheer power of hype and social media (especially x which is the hotbed for all things crypto).

Meme coins like this are driven purely by sentiment, often acting as a digital lottery where investors hope to “get rich quick.” Yet, as history has shown with previous memes coin bubbles, the euphoric rise is often followed by a brutal crash, leaving latecomers to bear the losses.

The absurdity of meme coins like Trump Coin underscores the irrational exuberance that often accompanies speculative assets that are termed as FOMO (fear of missing out). While blockchain technology and legitimate cryptocurrencies hold transformative potential, the rise of sentiment-driven tokens dilutes the credibility of the space as a whole or at least it should for legitimate investors.

This is not a one-off event for example you can find myriads of meme coins pumping based on tweet from celebrities such as Elon musk or special groups knows as ‘Cabal’, which usually push some coins on their twitter for an allocation on these coins, which they then Dump (or sell) with the little men (retailers) holding the worthless bag- A classic Pump and Dump.

Conclusion

As valuations soar to unimaginable heights, one can’t help but wonder: Are we witnessing the rise of a new form of financialization, or perhaps a new form of bubble? Or, is this simply the “new normal” in a digital age where value is increasingly detached from any real fundamentals—in many cases fundamentals don’t even exist.

Wallerstein, in his multi-volume series on the modern world-system, argues that wealth accumulation takes place through two primary channels: one through production, and the other through what he terms financial alchemy. The recent explosion of meme coin mania—an asset class built on hype, sentiment, and speculation—perfectly encapsulates this second form of accumulation. It is, in its most distilled form, financial alchemy: creating wealth not through innovation, production, or real-world utility, but through the manipulation of perception and market psychology.

The initial promise of cryptocurrencies—decentralization and equal opportunity for all—seems increasingly like a myth of the past. Today, the cryptocurrency market reflects the same old dynamics of power and control that has been the norm of the capital market, just in a new guise. The new gods of crypto may have swapped out Wall Street suits and financial instruments for online engagement digital tokens, rather there are no new gods, it’s the same old gods in new cloak.

The idioms ‘market is king’ and ‘market has everything Priced in’ seem redundant in the current epoch of financialization where capitalism has embodied itself in a techno-deterministic financial future. The crypto market has been long pushing the boundaries of absurdity especially in terms of financialization and valuations. The Trump coin seems like another development in that absurdity. But as the Trump Coin saga unfolds, one thing seems clear that markets be it stock or crypto or real estate are far from representing the fundamental valuation.

About The Contributor: Sagar Roy is a graduate from university of Delhi and post graduate from JNU, his research at JNU focused on Global Production Network or Global value chain with reference to IT sector, financialisation and Labour.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.