Trump Presidency Could Challenge Meme Coins: Finance Professor

Nic Carter also suggests that regulatory clarity could very likely steer focus toward more substantial crypto projects over speculative assets. Some, however, argue that Trump’s pro-crypto stance could actually spur optimism across altcoins. The possibility of Bitcoin hitting $80,000 could also reignite an altcoin rally, though its market dominance needs to reach certain levels before this can become a reality. 

Trump in Office Could Spell Doom for Meme Coins

A Donald Trump presidency could be bearish for the future of meme coins. According to Omid Malekan, a finance professor at Columbia Business School, meme coins are a form of “economic populism” that is aimed at challenging the “grifty” tokenomics of venture-capital-backed tokens. In an Oct. 26 post, Malekan explained that a shift toward regulatory clarity of ‘sanity’ in the US will redirect focus onto decentralized applications (DApps) and other meaningful crypto developments. As a result, this could trigger a prolonged bear market for meme coins.

Malekan also suggested that a broader “Republican sweep” could revive initial coin offerings (ICOs) and open token airdrops, which are concepts that he dubbed “token sanity.” These concepts were allegedly sidelined because of  regulatory scrutiny from people like Senator Elizabeth Warren and SEC Chair Gary Gensler. 

Nic Carter, a partner at Castle Island Ventures, agrees with Malekan’s sentiments, and argues that meme coins serve as a reaction to an “oppressive SEC regime.” According to Carter, if the SEC shifts its stance and becomes more lenient towards crypto, retail investors may no longer feel the need to trade meme coins.

However, not everyone agrees with this outlook. Some analysts argue that Trump’s pro-crypto promises could bring renewed optimism, which could push altcoin prices higher. Meme coin investor Murad Mahmudov argued that the appeal of meme coins is driven more by economic factors than by political ones. Mahmudov also argued that their popularity is linked to a rising global money supply that encourages spending and consumer access to funds. This is a trend he believes will continue under Trump’s administration.

Crypto trader Jordan Fish, who is known as “Cobie,” is also not completely satisfied with  Malekan’s theory. He claims that meme coins attract investors simply because of their potential for rapid price increases. Fish noticed that the appeal of non-meme coins diminished for many investors mainly because of high barriers to early access, which give only privileged investors the first opportunity to buy in. 

He suggested that even with a more crypto-friendly SEC under Trump, most retail traders will likely remain uninterested in tokens with larger market caps. According to Fish, meaningful SEC changes will need to include a crowdfunding-style exemption for decentralized token projects to really make an impact.

Trump’s new pro-crypto attitude resonated with a lot of voters. He even promised to make “America the world capital of crypto and Bitcoin,” and shared plans for the US to produce “all the remaining Bitcoin.” His message is resonating with crypto enthusiasts, which was evident in a recent Coinbase poll that indicated that two out of three crypto holders in swing states like Arizona, Michigan, Nevada, Pennsylvania, and Wisconsin are more inclined to vote for a candidate who supports the industry. 

Diminishing Returns Expected in Future Alt Seasons

Professor Omid Malekan is not the only person who believes momentum for alts like meme coins may be slowing down. Crypto analyst Willy Woo suggests that while altcoin seasons will continue, they may deliver smaller returns as the market matures. 

After the explosive growth in altcoins during the 2017 ICO boom, Woo now believes that each successive cycle will likely be less intense. However, he did clarify that investors will still see mid-cap and low-cap cryptos rising in value when Bitcoin’s price surges as market participants look for higher-risk returns. Bitcoin’s dominance currently sits at close to 56%, which is very close to the 60% threshold some analysts consider as a trigger for capital rotation into altcoins.

Bitcoin dominance chart Source: CoinStats)

Woo’s analysis is quite different from other viewpoints. Mati Greenspan, the founder of Quantum Economics, recently stated that the next bull run will be focused primarily on Bitcoin and its layer-2 solutions rather than altcoins. Instead, Woo sees the current altcoin cycle leaning heavily on meme coins, which he described as a lighthearted commentary on the state of the crypto space.

However, Woo did advise traders against “hodling” these assets without insider knowledge, as they tend to favor people with more privileged access, similar to a casino where the odds ultimately favor the house. Woo also reminded investors that the altcoin market cap only reflects tokens that have succeeded, which disregards the projects that have failed.

$80K Bitcoin Necessary to Ignite Altcoin Season

Bitcoin reaching its all-time high of $73,679 may not be enough to spark an altcoin season, according to Hashkey Capital. The investment firm’s analysts argue that altseason is more likely to happen if Bitcoin surpasses $80,000. They further suggest that Bitcoin’s dominance will likely need to climb between 62% and 70% to create conditions favorable for altcoins.

The wait for altcoin season has been very long, and many people in the crypto community believe it is well overdue. Michael van de Poppe, the founder of MN Trading Capital, referred to this in one of his recent posts. According to van de Poppe, this bear market for altcoins outlasted even the one from 2014 to 2016. 

Despite this, several meme coins posted impressive gains over the past month, which sparked cautious optimism that an altcoin rally could be around the corner. Among top-performing meme coins, Goatseus Maximus (GOAT) led with a 591% rise followed by Cat in a Dogs World (MEW) and Popcat (SOL), which saw 30-day increases of 63% and 66%, respectively. 

Bitcoin as a Solution for US National Debt

Trump may not only have an effect on the future of meme coins. During a recent interview on the Joe Rogan Experience, former President Donald Trump proposed replacing federal income tax with tariffs on imports as a primary revenue source for the United States. 

He specifically referred to the tariff policies of former President William McKinley in the 1890s, and argued that such tariffs generated so much wealth for the government that officials had difficulty deciding how to spend it. He believes a similar approach today could protect domestic industries, increase dollar demand, and support US exports. On the other hand, critics believe that tariffs will act as a hidden tax, raising prices for American consumers.

Donald Trump on the Joe Rogan Experience podcast (Source: YouTube)

Trump also floated other unconventional financial proposals, including the use of Bitcoin to address the national debt. In an earlier conversation with Fox News’ Maria Bartiromo, Trump suggested that Bitcoin could help pay down the $35 trillion debt, and even hinted at the possibility of transferring some Bitcoin to creditors as a way of reducing obligations. 

Asset manager Bryan Courchesne agrees that creating a Bitcoin strategic reserve for the US government could be feasible, and pointed to the approximately 200,000 BTC currently held by the Department of Justice through seizures. However, Courchesne acknowledged that regulatory and bureaucratic obstacles could prevent the establishment of a reserve like this. Earlier this year, former independent presidential candidate Robert F. Kennedy Jr. also suggested using Bitcoin as a means to stabilize the US dollar before exiting the race.