The memecoin death spiral began, ironically, at what seemed like its moment of greatest triumph.
On January 17, just days before his inauguration, president-elect Donald Trump launched his namesake token. Within 48 hours, TRUMP $TRUMP had rocketed 1,108%, from $6.20 to $75.35, reaching a market capitalisation of $24 billion. This briefly made it one of the 20 most valuable cryptocurrencies in the world.
The First Lady quickly followed suit. Melania Trump launched her own token on January 19, and it promptly surged to a $1.6 billion market cap.
Even Trump's inauguration preacher, Reverend Lorenzo Sewell, got in on the action with his own memecoin.
The presidential endorsement seemed to validate memecoins as a legitimate asset class after years on crypto's fringes. Far from signalling mainstream acceptance, the Trump family's memecoin adventure would mark the beginning of the end.
TRUMP has since collapsed more than 83% from its all-time high, erasing about $20 billion in market value. $MELANIA fared even worse, plummeting 93% from its peak.
According to blockchain intelligence firm Chainalysis, roughly 50% of Trump $TRUMP and Melania token holders had never bought a Solana token before. Almost half created their crypto wallets the day they purchased the tokens.
This influx of inexperienced retail investors buying at the top — only to watch their investments crater — has severely damaged crypto's reputation among mainstream audiences. These weren't crypto natives who understood the risks; these were people around the world drawn in by Trump's celebrity.
The fallout has been swift. California Democrat Sam Liccardo announced the introduction of the "Modern Emoluments and Malfeasance Enforcement Act" — aka the MEME Act — which would prohibit the president, vice president, members of Congress, senior executive officials and their family members from issuing, sponsoring or endorsing digital assets.
"Almost every one of the 800,000 people that bought the memecoin lost a lot of money. We're going to ensure there are criminal and civil penalties so people can sue," Liccardo claimed.
While Trump and his family haven't actually sold their tokens (which would constitute a true "rug pull" in crypto parlance), the damage to investor confidence was already done.
The presidential token debacle was merely the opening act in the memecoin tragedy.