Last Friday night around 9:45 PM ET President Trump launched a new memecoin ($TRUMP) on the Solana blockchain. Initially, many thought it was fake and that his account had been hacked. But, they were wrong. It was legit.
You can guess what happened next. Within 4 hours $TRUMP was up 4,000%, reaching $8 a coin before midnight. By the next morning, its price eclipsed $30 a coin and its market cap has surpassed $5 billion. It eventually reached a high of $74 a coin before crashing. As of this morning it’s trading at $38.
This isn’t the first time I’ve written about the craziness of crypto, but I haven’t addressed the topic for a long time. I’ve mostly ignored these kinds of events because they happen so frequently. Or at least that’s the way it seems if you’re active on Twitter or social media.
Every time someone becomes an overnight millionaire in some random cryptocurrency, we tend to hear about it. This happened with Dogecoin, Fartcoin, and many others over the last few years. $TRUMP is just the latest in a long line of FOMO-inducing cryptocurrencies to do the same.
But, these crypto success stories conveniently ignore two things. First, most of the gains accrue to a small number of early traders. One analysis of $TRUMP during its first few hours of trading illustrated that the people who experienced the greatest gains were those who bought within the first two hours. Everyone who bought after hour 2 still experienced a great return, but not necessarily the life-changing (10x+) returns that make the rounds online.
Second, these crypto success stories overlook the countless number of people who lost money trading memecoins. It’s survivorship bias of the highest degree. For every $TRUMP coin that did well, I can show you multiple coins that didn’t. For example, here’s the price of the Luigi Mangione ($LUIGI) coin since last December:
Trading memecoins doesn’t look so fun now, does it?
I know that the people who lose money in crypto are overlooked because I was one of them. In early 2022, I lost 70% of my investment in a handful of lesser known altcoins. While my loss was minimal both in absolute and in percentage terms, others haven’t been so fortunate.
Don’t worry, this post isn’t meant to warn you about the risks of investing in cryptocurrency. Everyone knows that they are risky. And, everyone knows that everyone knows that. The players understand the game. They understand that this isn’t a Treasury bill. This isn’t a “prudent” investment. This is a lottery ticket that they are hoping will make them rich.
We can sit here and pretend that people don’t know any better, but c’mon. People didn’t know any better about FTX. That was actual fraud. But trying to get rich in altcoins? People have known it was a gamble since 2021.
The big difference between today and 2021 is that in 2021 the Establishment wanted nothing to do with crypto. But that’s changed. Today the call is coming from inside the house and that house happens to be the White House.
With all this attention shifting towards crypto, however, some are worried about what might happen next. Legendary short seller Jim Chanos tweeted the following shortly after the launch of $TRUMP:
I’m afraid the “The Golden Age of Fraud” may not do justice to the next four years…
Are we entering a new golden age of fraud? I’m not sure, but I understand Chanos’ sentiment. When people in power use that power to enrich themselves, it feels wrong.
However, I would counter Chanos and say that this isn’t just specific to Trump. Trump just happens to be more public about it when he tries to enrich himself. After all, is launching a memecoin any worse than a sitting member of Congress trading individual stocks based on non-public information?
If anything, launching a memecoin feels less shady to me because we know what it is. It’s a memecoin! It’s made up. Most Americans don’t own it and never will. But when members of Congress trade individual stocks and profit off of them, those stocks are in our actual portfolios!
However, Trump’s memecoin could also be used by foreign agents to influence his policymaking or “buy” favors. I’m not here to pick sides though because both don’t look great.
Nevertheless, I think when people like Jim Chanos see Donald Trump launching a memecoin they misunderstand what’s going on. How do I know? Because a few years ago I would’ve agreed with Chanos. But I don’t see it that way anymore.
I’ve started to come to this realization that things have changed. The old power structures that used to control society are breaking down. The mainstream media isn’t as powerful as it once was. Higher education doesn’t have the same sway. A college degree still gives you an edge, but not like it did two decades ago.
As a result of this new dynamic, a lot of people are upset that others are having financial success in society without following the traditional path. Doug Boneparth’s tweet sums it up perfectly:
16 years of education and $120,000 for a fancy MBA only to watch another meme coin outperform every asset on planet earth.
The old currency was status and credentials. The new currency is attention.
This is obvious when you look at the decreasing amount of time that Americans spend socializing in person. This chart (from this Derek Thompson article) illustrates the significant decline in face-to-face socializing for various kinds of Americans from 2003-2023:
With people spending less time socializing, they are spending more time looking at screens. According to Statista, the typical American now spends over 8.5 hours per day consuming digital media, which includes the internet, social media, and streaming services. More importantly, this number has increased by 1 hour and 40 minutes per day (on average) since the beginning of COVID.
All this time online means that attention has never been more valuable. Fortunately for Donald Trump, he controls more attention than anyone on Earth. And because he controls attention, he can monetize it. This is what makes memecoins so powerful. They are vectors of attention in financial form.
Of course, I’m not recommending that you bet on attention as a way to build wealth. At the same time, I can’t deny that it has built some wealth for some people. And guess what? Over the next four years we are going to see even more of this kind of behavior. It’s going to get crazy out there.
My only recommendation is to stay the course and focus on the things that create actual value for people. What skills generate value today and what skills will generate value in the future? That’s what matters!
Though the game is changing, I believe that value creation will beat attention chasing in the long run. It may not seem that way right now because we are in an extended bull market in crypto (and for assets in general). But, when things turn south, value will win out. It always does.
I’ll admit that this strategy is a slower path to wealth. It won’t make you an overnight millionaire. But it’s more likely to make you a millionaire than trading altcoins.
This is the path I’m on but it’s taken a long time. I’ve been writing online for 8 years and I’m just starting to see some success from it. I’ve never experienced a 10x investment gain and likely never will. And that’s fine. Because while everyone is focusing on what Trump is gonna do next, I’ll be here adding value where I can.
Until next week, happy investing and thank you for reading.
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This is post 434. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data
