Most forecasts agree that a Donald Trump victory in the US presidential elections would positively affect the cryptocurrency market, yet its impact on the meme coin sector remains contentious.
Omid Malekan, a professor at Columbia Business School, linked interest in these coins to disillusionment with the unfair and “grifty” tokenomics of projects favouring venture funds and insiders.
To further ingratiate myself with Solana fans, here’s an argument of why a Trump win and/or Republican sweep (which Polymarket has at 50%) is bearish memecoins.
i) Memecoins themselves are a form of economic populism. They are a statement against the unfair ( and often grifty)…
— Omid Malekan ??♂️ (@malekanoms) October 27, 2024
In his view, a Trump victory would bring back ICOs, fully open airdrops, and “other kings of sanity.”
The weakening of the Democrats would ease some regulations, allowing for fee switching and dividend payments, economically supporting token holders. In such a scenario, a decline in interest in meme coins is expected, the expert noted.
“The latter is simple. Investors like their fairer initial token distribution. But they hold little value. In circumstances where coins with greater utility are not regulated by prohibitive measures, meme coins become less attractive,” Malekan explained.
Coin Metrics founder Nic Carter shares a similar view. He described the popularity of meme coins as a reaction to the “oppressive” regulation by the SEC. Should the regulator “find sanity,” the need to trade tokens would diminish.
— Memecoins = in large part reaction to oppressive SEC regime
— if SEC finds sanity, less desire / need to trade memecoinsQED, trumpwin bearish memecoins https://t.co/l3CmArstsh
— nic carter (@nic__carter) October 27, 2024
The Opposition Camp
Critics of Malekan’s theory argue that meme coin traders are not interested in politics, and the popularity of these coins has little to do with government actions.
Analyst Murad attributed the growth in token capitalization to the increase in global money supply.
99% of Memecoin buyers couldn’t care less about Politics
There are secular socio-economic forces at play that are much bigger than a single election
The rise of Memecoins has more do to with the persistently rising Global Money Supply.
Will that stop under Trump? Nope.…
— Murad ?? (@MustStopMurad) October 27, 2024
“Buyers of such coins do not bother to look at revenue sources and fee switches. The latter aspect accelerates the collapse of altcoins. Everyone comes to cryptocurrency for ‘x’s’. As the global money supply grows, greed will increasingly prevail over fundamental indicators and cash flows. This road leads only one way,” the specialist commented.
Anatoly Yakovenko, co-founder of Solana Labs, sees more trading psychology in the popularity of meme coins.
Trading memecoins is entertainment. It’s a Keynesian beauty contest of what people will find the most entertaining. Trading everything else is work. If anything people are gonna want to do less work.
— toly ?? (@aeyakovenko) October 27, 2024
“Trading such assets is entertainment. It’s a Keynesian beauty contest of what people will find the most interesting. Trading everything else is work. People tend to limit themselves in it,” he explained.
Trader Cobie agrees with Yakovenko. The expert saw in the popularity of meme coins a desire to “buy what can increase in price.”
In his view, even if the SEC becomes more crypto-friendly under Trump, many users will not buy assets listed on Binance with high capitalization, which someone previously purchased in an earlier “privileged access round.”
Since the beginning of October, the combined market value of the meme coin sector has consistently exceeded $50 billion. At the time of writing, it stands at $62.4 billion.
Hashkey Capital believes that for the altcoin season to begin, Bitcoin must reach $80,000.
Analyst Willy Woo predicted a weakening of such phenomena as the digital asset market matures.