This comes at a time when the cryptocurrency market is witnessing major transformations, especially with the inauguration of Trump, who expressed his strong support for digital assets.
Bitcoin has recently made significant gains, currently trading at over $100,000.
However, the introduction of the new meme coin (Trump Dollar) raises questions about its potential impact on Bitcoin’s dominance.
Is it a real competitor to Bitcoin?
It seems that the world of digital currencies is about to face more competition, after the strong gains achieved by Bitcoin and its sisters during the past few months, which exceeded expectations, which may prompt many investors to enter this market.
With the emergence of Trump's cryptocurrency on the scene, many wondered whether this new currency would be able to compete with the crowned queen on the throne of digital currencies?
The enthusiasm of the questioners was driven by the strong gains achieved by the digital Trump currency, which has multiplied its price several times since its launch to reach more than $70, while the trading volume reached $24 billion on Sunday morning and the market value recorded more than $14 billion.
But whether the new cryptocurrency can compete with Bitcoin is questionable, as meme coins are often prone to price fluctuations and crashes where they have no inherent utility.
For example, the Hawkgirl coin plunged 95% shortly after its launch last month, dropping from $500 million in market cap to $25 million.
Investors have filed complaints with the Securities and Exchange Commission about trading related to the currency.
Meme coins are often used by scammers looking to make a quick fortune at the expense of unwary investors.
The cryptocurrency community has been eagerly awaiting Trump's second term, after he claimed he intends to make the United States the "cryptocurrency capital of the planet," amid expectations of creating supportive regulatory environments for these currencies.
The president-elect has nominated Paul Atkins, a well-known cryptocurrency enthusiast who has served as co-chair of the Cryptocurrency Advocacy Group since 2017, to serve as SEC chairman.
Trump also promised to issue an executive order once he takes office to create a cryptocurrency advisory board of up to 20 members.
Not an investment opportunity
In general, the speculative nature of crypto assets raises concerns about a potential bubble, where political support and backing inflate asset prices beyond fundamental values, posing significant risks to investors.
Strong political and government support for cryptocurrencies could eventually undermine the appeal of crypto assets, Larisa Yarovaya, an associate professor at Southampton Business School, wrote for The Guardian this month.
“If the SEC turns a blind eye in 2025, consumers may be left unprotected from financial loss, especially when another meme coin bubble bursts,” she added.
According to the Trump Coin website, about 200 million tokens of this digital currency have been issued, and another 800 million will be issued in the next three years.
The meme coin's website includes a disclaimer that reads: "Trump memes are intended to serve as a means of expressing support and engagement for the ideals and beliefs embodied by the US President, and are not intended to be an investment opportunity, investment contract, or guarantee of any kind."
The site noted that it is not political and has no affiliation with any political campaign, political office or government agency, saying: "The Trump meme celebrates a leader who doesn't back down, no matter the odds."
In contrast, Trump faced a series of criticisms due to his launch of the new cryptocurrency.
“Trump owning 80% and timing the launch hours before the inauguration is an exploit and many will likely get hurt,” said Nick Tomaino, a cryptocurrency investor, on social media.
Such digital tokens are notorious for speculators using hype to drive up the value before selling at the highest market price, leaving those who bought the tokens to drown in losses as the price later collapses.
Trump plans to include Bitcoin in the reserve
Cryptocurrency investors are hoping the Trump administration will boost the industry at a time when the Biden administration has sought to counter the industry as it pursues crypto companies on charges of fraud and money laundering.
Leading crypto companies have donated nearly $10 million to Trump's inauguration fund.
Last month, Bitcoin's record rally surpassed $107,000 after the president-elect confirmed that he plans to create a US strategic reserve of Bitcoin similar to the strategic oil reserve, sparking enthusiasm among cryptocurrency investors.
Bitcoin and cryptocurrencies have returned to the spotlight as investors bet that the Trump administration will usher in a more friendly regulatory environment, boosting investment in these currencies. Indeed, the price of Bitcoin has risen by about 150% in 2024.
“We’re going to do something great with crypto because we don’t want China or anyone else to adopt it,” he told CNBC last month. “We want to be the head.”
Asked if he planned to build a cryptocurrency reserve similar to oil reserves, Trump said, “Yes, I do.” He called for the same thing earlier this year.
According to data provider CoinGecko, governments around the world hold 2.2% of the total supply of bitcoin as of July, with the United States holding nearly 200,000 bitcoins worth over $20 billion at current levels.
While data site Bitcoin Treasures showed that China, the United Kingdom, Bhutan and El Salvador hold significant amounts of Bitcoin, other countries are considering strategic reserves of the cryptocurrency.
Russian President Vladimir Putin said late last year that the current US administration was undermining the dollar's role as a reserve currency in the global economy by using it for political purposes, forcing many countries to turn to alternative assets, including cryptocurrencies.
“For example, Bitcoin, who can ban it? Nobody,” Putin said.
On the other hand, some warn against this matter, and Chris Weston, head of research at Pepperstone, expressed his belief that caution should be exercised regarding the strategic reserve of Bitcoin, expecting that it will not happen soon.
Bitcoin has risen more than 50% in value since the November 5 election, which saw Trump elected alongside several pro-crypto candidates.
Trump has previously been hesitant about cryptocurrencies, but at a Bitcoin conference in Nashville last year he said America would be the “crypto capital of the planet” once he returned to the White House.
His sons Eric and Donald Jr. also announced their own crypto project last year.
The total value of the cryptocurrency market has nearly doubled over the year so far to a record high of over $3.8 trillion, according to CoinGeek.
MicroStrategy, a major investor in the world’s largest crypto assets, has seen its shares rise more than sixfold over the past year, boosting its market cap to nearly $94 billion, making it the largest holder of cryptocurrency.
Trump's cryptocurrency may be a new phenomenon in the world of digital currencies, and it has made strong gains recently, but there are doubts about its ability to compete with heavyweight cryptocurrencies such as Bitcoin, the most popular and stable cryptocurrency.
Bitcoin still holds a leading position in the market thanks to its vast network and high market cap.
Ultimately, the competition between cryptocurrencies remains open and full of challenges and risks, and time is expected to reveal the extent of their ability to withstand and compete.