The upcoming token unlock of U.S. President Donald Trump’s memecoin (TRUMP) is poised to send ripples through the cryptocurrency market. Set to occur next week, this significant event will see the project’s team receiving $320 million, equating to roughly 20% of the circulating supply.
For many investors, this development may feel like yet another blow. Reports indicate that a large number of TRUMP token holders lost a staggering $2 billion collectively after purchasing the token earlier this year. The financial landscape for those who invested in TRUMP appears increasingly bleak, particularly as the token currently trades at $8.03, reflecting an 83% drop in value since January 18, just two days prior to Trump’s presidential inauguration.
Historically, token unlock events tend to be bearish for the market. Such events introduce a significant amount of new supply, often without corresponding incentives to enhance demand. Occasionally, markets may anticipate these unlocks, resulting in preemptive sell-offs that may lead to significantly lower prices as the event approaches.
Current data from Dune indicates a concerning trend: the number of unique TRUMP token holders has decreased from 817,000 at launch to just 637,000. Moreover, the number of wallets holding more than $1,000 worth of TRUMP has dwindled drastically, decreasing from 143,000 on January 19 to a mere 12,000 today.
The uncertainty surrounding whether Trump and his team will actively sell the unlocked memecoins adds another layer of intrigue. If such an action occurs on the open market, the consequences could be catastrophic. Given that the 2% market depth is estimated between $980K and $2 million, a sudden influx of $320 million in sell pressure may result in a rapid decline in price, a scenario many investors fear—one often likened to a death spiral.
Overall, the memecoin landscape continues to experience a significant downturn. Once a popular domain for retail investors seeking to capitalize on new opportune investments, the market has lost much of its luster. Memecoins like TRUMP have seen their market cap plummet from $119 billion in December to a mere $45 billion today, as reported by CoinMarketCap.
As we await the forthcoming token unlock, investors must remain vigilant and well-informed, understanding the inherent risks and the evolving dynamics of the memecoin market.
