TRUMP Memecoin (TRUMP) Soared 52% on April 23 After the Announcement of an Exclusive In-Person Dinner for the Top Tokenholders with US President Donald Trump

Updated April 24, 2024 at 1:14 a.m. PDT. By Stas Stash.

The price of Official Trump (TRUMP) surged 52% on April 23 after the announcement of an exclusive in-person dinner for the top tokenholders with US President Donald Trump.

For some crypto advocates, this marks the end of the bear market, especially as Bitcoin (BTC) bounced back above $93,000, but others have suspicions on how sustainable the TRUMP memecoin rally really is.

From a purely performance perspective, the Official Trump (TRUMP) memecoin has been a disappointment. After soaring above $75 on launch day, its gains quickly disappeared as investors noticed the high concentration of tokens and the short-term vesting period.

At first sight, it is difficult to justify TRUMP’s current market capitalization of $2.6 billion, given that 80% of the supply was allocated to founders and entities controlled by Trump.

For comparison, well-established projects such as Arbitrum (ARB), Jupiter (JUP), and Maker (MKR) hold a capitalization below $1.6 billion. Those token valuations derive from buybacks using treasury reserves or direct benefits in staking and DeFi mechanisms. For instance, Arbitrum, a leading Ethereum layer-2 scaling solution, holds $2.4 billion in Total Value Locked (TVL).

Jupiter, the primary decentralized exchange (DEX) on Solana, has $2.3 billion in deposits and has accrued $76.6 million in fees over the past 30 days, according to DefiLlama data. Meanwhile, Sky (formerly Maker), the project behind the highly successful DAI stablecoin, has $5.9 billion TVL and $28.6 million in 30-day fees.

TRUMP still in top 10 for trading activity

Besides being listed on major exchanges, including Binance, Bybit, OKX, Coinbase (NASDAQ:COIN), Upbit, and Kraken, and often promoted on social media by Trump, the memecoin has an impressive share in derivatives markets. Notably, its futures open interest stands at $700 million, a top-10 overall.

Well-established projects with market capitalizations over $6 billion, such as Chainlink (LINK), Litecoin (LTC), and Polkadot (DOT) have smaller futures open interest than TRUMP.

Still, while demand for futures markets allows larger traders to take part in the action, it does not necessarily imply optimism as longs (buyers) and shorts (sellers) are matched at all times.

Even though TRUMP is currently valued 84% below its all-time high, it remains a top-10 token in terms of volume. As of press time, only four cryptocurrencies surpassed TRUMP’s impressive $3.84 billion 24-hour turnover, according to CoinGecko.

Despite the huge trading activity, a single promotional event with US President Trump is unlikely to create lasting demand for the TRUMP memecoin, putting the current $13.50 price tag in check.

Unless the project eases investors’ concerns about token unlocks, there is hardly a way to justify the 50% premium versus cryptocurrencies that offer utility and perspectives of growth.

It is worth noting that Shiba Inu (SHIB), another memecoin with no real utility, presently trades at a $8 billion market capitalization, hence one could easily argue that a token officially supported by the sitting US President is worth far more, paving the way for $30 or higher price targets for TRUMP.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.