Many experts believe that Donald Trump will positively impact the crypto market more than Kamala Harris. However, the impact on the meme coin segment remains a matter of debate.
According to Columbia Business School professor Omid Malekan, Trump’s success in the election could negatively impact the meme coin sector.
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
The expert noted that investor interest in meme coins has increased due to disappointment in the tokenomics of venture-backed projects. If Trump becomes president, the Republican Party may change some rules allowing token holders to benefit from dividends and fees, which could reduce interest in meme coins.
Meme coins as a response to SEC policies
Meme coins have become a kind of response to the tough policy of the U.S. Securities and Exchange Commission (SEC), so their softening in the event of a victory of the Republicans with Donald Trump at the helm will lead to a drawdown, stated the co-founder and general partner of the firm Castle Island Ventures, Nic Carter.
This is how he commented on the publication of the professor of the Columbia Business School, Omid Malekan. In it, he called on the community of the Solana project to support the Democrats, who are represented in the presidential elections by Kamala Harris.
The expert argued his opinion as follows:
- Meme coins represent economic populism and a protest against traditional crypto assets and the participation of venture investors.
- Institutionally funded projects are becoming a response to SEC Chairman Gary Gensler’s and Senator Elizabeth Warren’s “repressive policies.”
- A Republican victory could strengthen the position of significant traditional crypto assets. This will introduce economic mechanisms to token holders who are absent from meme coins.
Malekan insisted that better regulation of the crypto sphere in the U.S. will act as a “bearish” factor for meme coins. Carter supported him, saying that if the SEC’s position changes, demand for meme coins will decrease, but it will not disappear completely due to existing speculative interests.
Opinions from the crypto community
People react to these statements differently. Blogger and influencer Murad believes that the growth of meme coins is not due to political factors but economic ones, and the election results are unlikely to significantly affect this sector.
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
Another popular blogger, Jordan Fish, known as Cobie, also disagrees with Malekan and Carter, emphasizing that the interest of ordinary traders in meme coins remains high since they cannot participate in large projects in the early stages.
Meme coins and the U.S. Election
The meme coin sector has become the fastest-growing sector in the crypto industry in 2024, rising by more than 1800% since the beginning of the year. Ahead of the U.S. election, meme coins associated with Donald Trump have seen a sharp increase in volume and price.
This category holds a small capitalization relative to the entire meme coin market. Coingecko estimated its size at $1.2 billion, which is 2.4% of the entire market, with only four of them having a capitalization above $100 million. However, this did not prevent them from attracting the attention of the crypto community.
Forrest Przybysz, a trader and CEO of Sistine Research, noted that meme coins’ popularity is based on attention cycles, and the more attention they receive, the higher their value will be.
“Trump is an attention magnet. Therefore he is the ideal subject for a meme token.”
Forrest Przybysz, a cryptocurrency trader and CEO of Sistine Research
Yan Liberman, co-founder at crypto research firm Delphi Digital, emphasized that meme coins act as collectibles, allowing for the monetization of public attention.
“Meme coins are similar to nonfungible tokens in terms of being a bit of collectors’ item. The idea is that you monetize public attention,”
Yan Liberman, co-founder at crypto research firm Delphi Digital
Thus, if Trump’s election promises come true, America will see a new boom in the cryptocurrency segment. However, the question of meme coins remains open — the coins are unlikely to have any practical utility and strategic importance for the development of the decentralized finance market.
One way or another, the crypto market is likely to face volatility as the U.S. presidential elections approach. But it’s not entirely clear what kind of volatility it will be.
