Trump-themed Memecoins Defy Crypto Market Downturn, Surge Ahead of Inauguration

Trump-themed memecoins have been making waves in the crypto market, bucking the recent downturn and surging ahead of President-elect Donald Trump's inauguration on January 20. Despite the broader crypto market's struggles, these memecoins have been gaining traction, driven by political sentiment and hype surrounding the upcoming presidential transition.

The rally in Trump-themed memecoins comes as the crypto market has been grappling with a significant sell-off. On December 10, the total crypto market cap fell by over 15%, with memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) witnessing large drops on the 24-hour chart. However, Trump-themed memecoins have managed to buck this trend, with MAGA (TRUMP) leading the losses but still posting significant gains.



MAGA (TRUMP), the largest Trump-themed memecoin by market capitalization, led the losses, dropping 5.6% over the last 24 hours. However, it is essential to note that DOGE was down as well, recording 10.4% daily losses, while Ethereum-based Pepe (PEPE) was the only top-cap memecoin posting gains, up 1.7%. This indicates that the broader memecoin market is facing headwinds, but Trump-themed memecoins are managing to maintain their momentum.

The drop in memecoins on December 10 was preceded by a decrease in open interest (OI), with Pnut (PNUT) leading the retreat with a 30% decline in OI over the last 24 hours. Open interest refers to the total amount of pending derivative contracts that have not yet been settled. In a futures contract, for every seller, a buyer is required to settle the contract.

DOGE saw its OI drop by over 20% on the day to $3.1 billion, nearly six times WIF's $519 million in OI, which had decreased by 27% over the same period. PEPE's OI was standing at $302.4 million, down approximately 11%.

The drop in OI for memecoins indicates bearish momentum in the market as leverage traders close more contracts in anticipation of further decreases in price. Massive crypto liquidations accompanied the memecoin crash, with over $1.7 billion in leveraged positions wiped out within the past 24 hours. The biggest long liquidation of this bull cycle so far, according to CoinGlass, was recorded on December 10.

Over $72.6 million in DOGE longs and more than $22.35 million in SHIB longs accounted for the majority of liquidations across memecoins in the past half-a-day. Similarly, more than $7.9 million PEPE longs and $3.6 million WIF longs were liquidated over the same period.

This marked the biggest liquidation event since 2021, accompanying the start of the 2022 bear market. More recently, a similar liquidation event accompanied the December 5 flash crash that saw more than $816 million longs wiped out of the derivatives market against $280 million short.

Despite the recent sell-off, Trump-themed memecoins have managed to maintain their momentum, driven by political sentiment and hype surrounding the upcoming inauguration. As the dust settles, some may view this drop as a buying opportunity, as the coins could rebound later. However, investors should remain cautious and monitor the market closely, as the volatile nature of memecoins and the crypto market as a whole can lead to unexpected price movements.