By Zhu Weisha | January 23, 2025
I. Global Impact of Trump Coin: Analysis of Meme Coin Valuation Logic and Phenomenon
As of January 22, addresses of Trump Coin ($TRUMP) that sell only but don’t buy have sold $310,654,055 worth of tokens. This rapid monetization has caught global attention, making it one of the fastest ways to convert influence into money. The biggest benefit is drawing global attention to cryptocurrencies, making it a significant promotional event for the crypto world. President Trump's move has received mixed reactions. This article aims to reveal the valuation logic behind meme coins through the issuance of Trump Coin and provide a valuation perspective.
1. Issuance Status
1) Background:
- Issuance Date: January 17, 2025
- Issuance Platform: Solana Chain
- Total Tokens: 1 billion
- Locking Mechanism: 80% of tokens are locked and released over 3 years, held by companies related to Trump
- Highest Price: $75.35
- Current Price: $37.33
- Market Cap: $7.2 billion (circulating market cap)
- Cryptocurrency Ranking: 25th
- Meme Coin Ranking: 3rd, only behind Dogecoin (DOGE) and Shiba Inu (SHIB)
2) Market Appeal:
- After issuance, Trump Coin became the most talked-about new meme coin.
- Its market cap surpassed all newly issued meme coins, becoming a market hotspot.
2. Running Performance (According to X user NingNing's research)
1) Trading User Data:
- Total On-Chain Traders: 929,543
- Daily New Traders Growth:
< Peak growth occurred on January 18 at 11 AM (Beijing Time), with 42,208 new traders per hour.
< The growth curve quickly declined, with only 1,383 new traders per hour as of January 22 at 4 PM.
2) Holding Address Data:
- Peak Total Holding Addresses: 852,000
- Current Holding Addresses: 770,000
- The number of addresses began to slowly decline after reaching the peak.
3. Analysis of Profitable and Losing Accounts
1) Profitable Accounts Data:
- Total Profitable Accounts: 327,308, accounting for about 36.5%
- Profit Distribution:
< Earned $10M+: 28 addresses
< Earned $1M–$10M: 424 addresses
< Earned $10k–$1M: 16,791 addresses
< Earned $1k–$10k: 50,636 addresses
< Earned $0–$1k: 259,429 addresses
2) Losing Accounts Data:
- Total Losing Accounts: 569,155, accounting for 63.5%
- Loss Distribution:
< Lost $0–$1k: 486,421 addresses
< Lost $1k–$10k: 65,763 addresses
< Lost $10k–$1M: 16,571 addresses
< Lost $1M–$10M: 367 addresses
< Lost $10M+: 33 addresses
3) Total Account Statistics:
- Total Accounts: 896,460 (fewer than the registered on-chain accounts of 929,543)
4. Comparison with Meme Coin Market
According to the pump.fun platform data released by @ arndxt _ xo on social media, before the issuance of Trump Coin, the overall profitability rate of meme coins was extremely low:
1) Profit Situation:
- Earned over $1M: Only 70 people, accounting for 0.0028%
- Earned over $100k: Only 924 people, accounting for 0.037%
- Earned over $10k: 11,936 people, accounting for 0.477%
- Earned over $1k: 76,567 people, accounting for 3.061%
2) Loss Situation:
- Overall Loss Rate: 80%
In comparison, the performance of Trump Coin is better than the general market, with 36.5% of profitable accounts, much higher than the general meme coin's 20%.
II. Trump Coin Valuation Analysis: Short-term Sentiment vs. Long-term Logic
The principle of valuation is "short-term is a voting machine, long-term is a weighing machine." The valuation of meme coins has never had a clear theoretical support, relying more on market sentiment, the empowerment of intangible assets, and the cyclical fluctuations of the broader environment.
1. Valuation Comparison: Trump Coin vs. Dogecoin and SHIB
1) Relationship between Market Value and Holding Addresses
- Dogecoin: 7 million holding addresses, market value of $52.23 billion, market value/address ratio of 0.74
- SHIB: 1.46 million holding addresses, market value of $11.78 billion, market value/address ratio of 0.8
- Trump Coin: 770k holding addresses, market value of $7.2 billion, market value/address ratio of 0.99
2) Data Interpretation
- A higher market value/address ratio means a higher valuation relative to the user base. Trump Coin's 0.99 is significantly higher than Dogecoin and SHIB, following the rule of "the smaller the market value, the higher the address ratio."
- Explanation 1: Trump Coin is still in its early stages, market sentiment has pushed up its short-term valuation, and it has not yet completed adjustment.
- Explanation 2: From a long-term trend, Trump Coin's market value/address ratio may gradually fall to the 0.74–0.8 range, aligning with mature meme coins.
2. Can Trump Coin Break Through Previous Highs?
1) Historical Cases: Dogecoin and SHIB
- Dogecoin
< Under Musk's push, Dogecoin once reached a high of $0.74 but then fell back to around $0.078, consolidating for a long time. With fewer ecosystem actions of the Dogecoin community compared to Shib, being able to stay around $0.078 is greatly influenced by Musk's intangible assets. In December 2024, stimulated by operations such as the "Department of Government Efficiency", it rose to $0.49 in a short period but failed to break through the historical high of $0.74 again, falling back to $0.35.
< Core Driver: Musk's intangible assets catalyze Dogecoin's short-term rise. While intangible assets are helpful for long-term trends, the long-term trend relies more on ecology development and consensus generated by the community.
- SHIB
< As the "Dogecoin killer," SHIB once reached a high of $0.00008 but then fell back to $0.000007, showing a decline in emotional value similar to Dogecoin.
< However, SHIB has formed a relatively complete ecosystem through ecology development (such as ShibaSwap, Shibarium, NFT, Metaverse etc), enhancing its long-term value support.
< In 2024, it experienced two waves of rise, but the second wave failed to break through the high point of the first wave in 2024. Dogecoin also had two waves, but the second wave reached a new high. This highlights the role of Musk's intangible assets.
2) Trump Coin's Potential and Challenges
- The possibility of breaking through the previous high in the short term is low
< Historically, neither Dogecoin nor SHIB broke through the previous highs as the number of holding addresses increased.
< Trump Coin's current valuation is relatively high, facing adjustment pressure in the short term.
- Key to Breakthrough
< The future height of Trump Coin depends on whether the team can fully utilize the community and establish practical application scenarios.
3. Valuation Logic of Meme Coins: Emotional Value vs. Intangible Assets
1) Emotional Value: Short-term Driver
- Meme coin prices are often driven by market sentiment, especially in the early stages. The peak of emotional value usually lasts no more than 1 month.
- Each favorable event (such as celebrity endorsements, hot narratives) can drive short-term increases, but this is usually followed by value regression.
- Current Valuation of Trump Coin: To a large extent, it is the product of market sentiment and may face adjustment in the short term.
2) Intangible Assets: Long-term Support
- Intangible assets are important for both short-term and long-term meme coins:
< Short-term: By means of narratives and celebrity effects (e.g., Musk for Dogecoin), increasing market attention.
< Long-term: Through commitments or practical actions (e.g., ecology building, monetization methods), enhancing trust and value support.
- Intangible Assets of Trump Coin
< President Trump's personal brand gives Trump Coin huge short-term appeal, but if there are no more actions in the future, the effectiveness of such intangible assets will quickly diminish.
4. Market Structure and Limitations of Meme Coins
1). Market Position
- Currently, there are only two meme coins in the top 20, with a total market value of approximately $62.5 billion, accounting for 2% of the total market value of the top 20 cryptocurrencies.
- Although meme coins experienced a boom in 2024, they did not change the overall structure of the cryptocurrency market and remain on the fringes.
- TrumpCoin ranks third and has the potential to lead meme coins to break through.
2). Possibility of a Super Cycle
- In 2024, a prominent figure in the meme coin community predicted that meme coins would usher in a "super cycle," but in reality, meme coins are still constrained by Bitcoin's four-year cycle.
- If the leading meme coins cannot break through previous highs, the super cycle does not exist.
3). Necessity of a New Model
- To change the marginal status of meme coins, a new model must emerge. This is also the expectation for Trump Coin.
5. Harsh Conclusion: Future Challenges for Trump Meme
If the Trump Coin team does not take further action and relies solely on President Trump's personal brand and a one-page white paper, its price may not break through previous highs and may even face a continuous decline. This could not only negatively impact Trump's brand but also trigger broader market concerns.
- The Trump team needs to enhance market confidence through narratives, commitments, and practical actions to avoid price declines.
- The cryptocurrency executive order is a positive signal, but new driving forces are still needed to effectively drive the long-term value of Trump Meme.
2). Nature of Meme Coin Valuation
- Short-term: Emotional value determines price fluctuations, usually not exceeding one month.
- Long-term: Intangible assets support prices through the expansion of narratives and application scenarios.
III. A Few Issues to Understand
1. Valuations of meme coins are lower than value coins.
Taking the native token HYPE launched by Hyper Liquid as an example, it is closest to Trump Coin in terms of issuance time and market value:
- Price Performance: HYPE opened at $2 on November 29, 2024, reached a peak of $33 on December 23, and fell back to $23 on January 23, 2025.
- Market Value and Holding Addresses: Market value is $7.6 billion, ranking 23rd, two places higher than Trump Coin; holding addresses are only 360,000, which is slightly more than one-third of Trump Coin.
- Comparison of Characteristics: HYPE's rise is not a sharp increase or decrease but shows a stable upward trend, which contrasts sharply with the volatility of meme coins. The market is more willing to give higher valuations to innovative projects with practical application value, while Trump Coin mainly relies on intangible assets and market sentiment.
2. Meme coin price increases cannot be just a one-time push
There are over 5.7 million meme coins issued on the Pump.fun platform. Any meme coin, as long as it has a bot and a bunch of accounts, can continuously raise its price through wash trading, eventually selling your tokens to unsuspecting buyers. So, don't even look at tokens issued without a narrative.
3. Projects with influence only have mere emotional value
Meme coins driven by emotional value are usually short-term. The market trend may last only a day, ultimately depending on who can exit quickly.
4. Meme coins lack support of a price floor
Some say Bitcoin is also a meme coin. Yes, Bitcoin was a meme coin in its early days, but unlike meme coins, it has a price floor based on computing power, which meme coins lack. The price floor of meme coins is usually estimated by the number of holding addresses of similar projects, but since holding address data can be manipulated, this method is unreliable.
5. The destination of meme coins is not religion
Cryptocurrency researcher Murad proposed that the ultimate goal of meme coins is to become a "cult meme," forming a religion-like sense of belonging through a fanatic community. However, the essence of meme coins is still a profit-driven community, where the narrative and price increase constitute belief, not religious faith.
6. Meme coins have value
As a cryptocurrency innovation, meme coins aim to measure human spiritual needs, attention, and intangible assets. They hope to directly price spiritual products, attention, and intangible assets. This is the attempt of meme coins. When we didn't understand Bitcoin, we thought it was a scam. When we don't understand meme coins, we also think they are scams. But they are not. We just haven't found the right measurement methods, narrative methods, and direct means of monetization. The current level of influencers is not enough to explain this phenomenon.
7. How consensus is formed
Some say meme coins are consensus coins, and that's correct. This consensus is different from moral consensus; it is based on interests, hobbies, and beliefs. Meme coins can only be established if they have at least two of these three elements. For more details, refer to my article series "Differences in Mechanism Between Company and Crypto Community". The stability of belief depends on the correctness of the story logic, which is reflected in the trend of rising value without a ceiling. Bitcoin is like this. Interests can generate likes and common hobbies. If this circle of likes is continuously expanding, it can bring benefits, promote continuous price increases, and generate belief from the value brought by interests. From interest to belief, or from benefit to belief, or all three.
Consensus must continue to expand, marked by continuously reaching new highs in price. The overall lack of new highs in meme coins indicates that the monetization model is incorrect. Our base stablecoin DW20, like Bitcoin in its early days, is also a meme coin. It has not yet been launched on exchanges, but its off-exchange trading has managed to increase its price by 140 times in one year.
Trump's intuition is very good. In the next article, We will guess how President Trump should resolve this situation.
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