Meme coins slump, investor focus shifts toward Trump tariff threats
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- The meme coin sector has declined over 50% since President Trump's inauguration.
- Trump's tariff threats and the recent launch of PolitiFi meme coins have triggered heavy losses in the crypto market.
- Bitwise's Matt Hougan suggests recent events surrounding meme tokens could end the craze.
The meme sector is down on Wednesday, with top meme tokens declining alongside the broader crypto market following President Donald Trump's tariff threats. The decline in meme coins suggests investors are losing interest in the sector as sentiments turn bearish on President Trump.
Meme coin demand drops as investors turn bearish toward Trump tariffs
Meme coins experienced heavy losses in February as their demand fell to pre-election levels.
The meme sector has plunged by 50% since President Donald Trump's inauguration on January 20.
The crash reflects a broader dip among several meme categories. For example, the Dog-themed meme sector — with tokens such as Dogecoin (DOGE), Shiba Inu (SHIB) and WIF — has declined by 55.5% since the inauguration.
Likewise, the Solana meme category, which includes tokens like TRUMP and BONK, fell by 66.2% within the same period.
The PolitFi token category, which comprises tokens such as MELANIA and MAGA, also dived by 72%.
The huge losses in the meme coin sector largely stem from Trump's tariff threats on international trading partners, including the European Union, China, Canada and Mexico and recent pump-and-dump schemes from token launches.
The tariff sparked concerns of a global trade war, dampening investors' sentiment concerning crypto assets, especially the highly volatile meme sector.
Additionally, the collapse of the LIBRA token — connected to Argentine President Javier Milei — exacerbated losses across the sector.
Bitwise's Chief Investment Officer Matt Hougan stated in a Tuesday's post that the failure of LIBRA, along with President Trump's related TRUMP and MELANIA tokens, will end the meme craze.
Hougan predicts this end will occur within the next six months, with new trends such as fund tokenization and institutional adoption of Bitcoin as its replacements.
Furthermore, Trump's connection to the meme market also played a key factor in its recent downturn.
The crypto mark saw a major rally after Trump's presidential election victory as market participants anticipated favorable crypto policies under his administration.
However, his association with meme coins such as TRUMP and MELANIA, which have led to substantial losses for investors, has eroded market participants' confidence.
As a result, the recent market crash erased post-election meme coin gains for several investors.
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