Meme Coins Crash 86% After Hype-Driven Surge

Meme coins, a type of cryptocurrency created as jokes or to capitalize on internet trends, have surged in popularity, drawing in speculators who hope to turn small investments into large profits. These digital assets, unlike traditional cryptocurrencies such as Bitcoin or Ether, often lack intrinsic value or utility. Instead, they rely on humor, viral trends, and the popularity of internet figures to gain traction. The $TRUMP token, for instance, was one of the first meme coins to gain widespread attention, following a pattern where early adopters and insiders profit from the hype, while latecomers are left with worthless tokens after the inevitable crash.

Meme coins have been around almost as long as Bitcoin, with the first wave emerging in 2013 with Dogecoin. The cycle of speculation has remained consistent: a meme coin goes viral, early adopters and insiders profit from the hype, and latecomers are often left holding worthless tokens after the inevitable crash. The $TRUMP token’s explosive rise and steep decline in January 2025 followed this well-worn pattern, demonstrating once again how meme coins thrive on hype-driven volatility.

Unlike traditional cryptocurrencies, meme coins are often launched with nothing more than a silly name and a hyped-up narrative. Many of these tokens are designed to benefit their creators the most, with developers and insiders secretly holding a large share of the total supply. Once enough investors buy in, these insiders cash out, causing the price to crash. Most liquidity pools are controlled by the creators, so they can pull out the funds at any time, further destabilizing the market. This practice, known as "rug-pulling," involves the abandonment of the project by its creators, often leading to fraud, conspiracy, or other criminal acts. However, enforcement against such practices is vastly disproportionate to the volume of meme coins minted every day, especially when the creators are based in a different country than the investors.

The devaluing of the $TRUMP meme coin was further exacerbated due to the launching of a $MELANIA meme coin shortly after the launch of $TRUMP. The $TRUMP meme coin is now valued at around $10.50 as of March 11th, 2025, off by about 86% from its all-time high of $75.35 on January 19th, 2025. Allegations of profiting from his position aside, the implications of this practice are far-reaching if left unchecked.

Not long after Trump’s announcement of his meme coin, U.S. Senator John Cornyn of Texas announced the launch of his very own token. Patriotically named $USA, the token briefly surged before plummeting to near zero within hours. An apologetic tweet was eventually sent from the Senator’s account after claiming to be hacked, and while this could be chalked up to yet another scam revolving around poor account security by the hands of the Senator, it begs the question of how those with power and influence will choose to utilize the trend.

Over the Valentine’s Day weekend, the President of Argentina, Javier Milei, endorsed a token called $LIBRA. The market cap of this token skyrocketed to over $4 billion and crashed leaving many purchasers holding worthless bags of tokens. He is now under investigation for fraud due to his involvement with the meme coin.

When it comes to those with authority, the use of a meme coin could quickly become a safe mechanism to foster corruption by way of bribery. With sufficient coordination, parties can launder illicit funds using the token as a premise for value. But the possibilities are endless; if no one is held accountable.

Despite how predatory these schemes may seem, most meme coin launches do not technically break any laws. The reason lies in the disclaimers and the absence of explicit promises regarding future value. As long as the creators openly state the token has no real utility and warns investors of the coin’s asserted status, the creators can avoid legal consequences. Many meme coins include disclaimers that label them as “for entertainment purposes only” and make it clear they are not investments. Without any language implying a guaranteed return or financial gain, there are no legal grounds for fraud charges when the price inevitably crashes.

The White House AI and Crypto Czar likened the President’s memecoin to a collectible, claiming ”You have Digital Assets that are collectibles like NFTs or meme coins,” and “I think the Trump coin is a collectible,” during an interview. This analogy is not new. The understood reason for this contrived explanation of meme coins is to avoid being classified as a security under the Howey Test, thereby evading the regulatory purview of the SEC. Established by the U.S. Supreme Court in 1946, the Howey Test identifies an investment contract as a security when there is an investment of money with the expectation of profit largely from the efforts of others. If a cryptocurrency is deemed a security, it must comply with strict regulations set by the SEC that require registration, disclosures, and compliance measures. But if creators declare their cryptocurrency to be art or a cultural product, they can argue their coin is not an investment but a collectible or a piece of artistic expression. This loophole does not make the practice ethical, but it allows meme coin creators to stay within the boundaries of the law, even as they manipulate market hype for personal profit.

Ultimately, the fundamental truth about meme coins is that by the time most people hear about them, it’s already too late. The creators and early buyers have set the trap, and investors are left with “dry land” like 19th century oil prospectors. For those considering jumping into the next viral meme coin, the reality is simple: if you’re not “in the know,” you’ll likely lose your dough.