Trump's Meme Coin Faces an Uphill Battle as Insiders Control 80% of the Supply

Donald Trump's full-throated embrace of crypto on the campaign trail culminated in the launch of his very own meme token shortly before his inauguration, but the president might have trouble cashing out on the dizzying gains from the $Trump coin.

Donald Trump's foray into crypto during his presidential campaign culminated in the launch of his own meme token, the $Trump coin, shortly before his inauguration. However, the president may encounter challenges in cashing out on the astronomical gains generated by the token.

Launched on Friday, the meme token reached its peak by Sunday, boasting a fully diluted market value of nearly $73 billion. Since then, the token has experienced a sharp decline of about 50%, yet it still maintains a fully diluted value of around $38 billion.

In a matter of days, Trump has ascended to become one of the biggest crypto billionaires globally — at least on paper. As of Tuesday afternoon, CIC Digital, the issuer of the $Trump coin and an affiliate of the Trump Organization, controls 80% of the token's supply, which is valued at approximately $30 billion.

According to the token's official website, 10% of the remaining supply is allocated for public distribution, while another 10% is earmarked for "liquidity." The website also states that 1 billion $Trump coins will be issued over a three-year period, with 200 million available currently.

While CIC Digital controls a vast majority of the token's supply, that doesn't guarantee that it can sell that stake at the current market prices.

A wave of selling would likely drive down the price of the token substantially.

"Tokens held by insiders could distribute this supply, leading to losses for unsuspecting investors," said Gautam Chhugani, an analyst at Bernstein, regarding CIC Digital and its holdings of the $Trump token.

Investors encountered this phenomenon previously with Trump-linked assets, particularly in the volatile trading of shares in Truth Social's parent company, Trump Media & Technology Group.

Trump owns about 60% of Truth Social shares, and when his lock-up period expired in September, the stock plummeted on concerns that he would unleash a wave of selling that would outpace any demand for the stock.

The share price rebounded when Trump indicated he had no plans to sell Truth Social shares.

This same dynamic applies to the president's meme coin. Any indication that CIC Digital insiders will sell the token would likely create downward pressure on its price.

"Given how quickly the token reached a stratospheric market value, the 80% supply held by insiders does put some pressure on its market value," said Chhugani.

The analyst noted that while meme coins tend to come and go, a token directly associated with the president would probably have more staying power than most. However, the ownership structure may make it less appealing.

"In this case, a meme coin capitalizing on Trump's brand and politics has potential longevity but would depend on the potential token design to make it less extractive due to 80% insider supply by the Trump affiliates," said Chhugani. "The Trump team followed up with a new coin launch called $Melania, and the market reacted negatively to the further dilution of the brand with market participants perceiving it to be extractive."

Correction: January 21, 2025 — An earlier version of this story misstated when Donald Trump's lock-up period expired for Truth Social stock. It was in September, not earlier this year.