Recent developments since the inauguration suggest that the new administration is prioritizing an industry-friendly regulatory environment. We believe there is still significant upside headline risk in the early days of Trump’s term. Coupled with an easing DXY/yields, as well as substantial inflows into the crypto ecosystem, we think it’s prudent to maintain a long bias.

The Launch of TRUMP Coin

This past weekend will undoubtedly go down as one of the most extraordinary moments in crypto history. On Friday night, during his inaugural “crypto ball,” President-elect Donald Trump shocked the world by launching his own memecoin, TRUMP. The announcement, made around 10 p.m. ET, took both crypto insiders and the broader public by surprise, creating widespread confusion among market participants.

Skepticism was immediate and understandable. The memecoin’s debut came via Trump’s TruthSocial and X accounts, raising doubts about its legitimacy.

Moreover, the token’s distribution fueled suspicion: it has a 10% float, with 10% made available for liquidity, and the remaining 90% was allocated to the team, set to unlock in tranches over three years. Unlike other successful memecoins with more decentralized distribution, TRUMP’s bubble map tells a story of centralized ownership.

Initially, many assumed Trump’s accounts had been hacked and dismissed the token as an elaborate scam. However, as Trump continued posting unrelated content from his verified accounts, it became clear that this was, indeed, a sanctioned initiative.

By Sunday, TRUMP had reached a staggering $76 billion in fully diluted market cap.

But before the crypto world could digest this, another surprise dropped: Trump endorsed a second memecoin, MELANIA, dedicated to the First Lady.

The launch of MELANIA created an even greater level of chaos on-chain, as traders scrambled to find liquidity. The surge in activity overwhelmed infrastructure on Solana, with platforms like Jito, Phantom, and various centralized exchanges struggling to handle the demand.

The frenzy also triggered a sell-off across many illiquid, higher-risk memecoins, with TRUMP taking the hardest hit, dropping over 50% from its peak.

While MELANIA failed to achieve the same meteoric rise as TRUMP, it still reached an impressive, fully diluted valuation of nearly $14 billion before losing momentum on Monday. As of today, TRUMP and MELANIA are trading at approximately $38.9 billion and $3.6 billion, respectively.

Now, as we find ourselves in a world where the sitting President of the United States and his First Lady have official memecoins traded across centralized and decentralized exchanges, it’s worth reflecting on the broader implications. Below, I summarize our key takeaways from this unprecedented series of events.

Terrible Optics

To some extent, the entire crypto industry is collectively engaged in a marketing campaign to attract new users and investors by emphasizing its transformative potential. Key narratives include Bitcoin as a reliable long-term store of value, stablecoins as a tool to enhance U.S. dollar dominance in emerging markets, crypto-based incentives facilitating the cost-effective and quick buildout of physical infrastructure, and permissionless financial applications enabling decentralized trading, borrowing, and lending. These use cases demonstrate real-world value and product-market fit, standing as cornerstones of the industry’s legitimacy.

However, these narratives are often overshadowed by the speculative excess inherent to crypto markets. While this speculative activity drives the experimentation necessary to build these products, it is not always the image the industry wishes to present to the broader public.

When the President of the United States leverages blockchain technology for one of its most speculative and “degen” use cases, it reinforces negative stereotypes about the space being a hub for memecoins and quick profits. Furthermore, it is tough to overlook the ethical concerns surrounding a sitting president launching a token. It raises questions about conflicts of interest and potential exploitation of retail investors, which could also serve to tarnish crypto’s reputation. I am sure that many are contemplating a scenario in which a leader of a foreign nation purchases TRUMP to seek favorable treatment from the United States. This is probably a discussion that extends beyond the walls of crypto, but for better or worse,e crypto is the medium for this specific instance of potential impropriety.

Signals a Changing of the Guard

On the other hand, the TRUMP token launch underscores a seismic shift in U.S. crypto policy. Unlike the prior administration’s hostility, the current administration is embracing crypto and signaling a more business-friendly approach.

The incentives are clear: with Trump and/or his affiliates now holding significant crypto exposure, they are more likely to advocate for a light-touch regulatory regime that benefits the broader ecosystem.

While some skeptics interpreted the token launch as evidence that the administration’s crypto promises were insincere, early developments suggest otherwise.

On Tuesday, the day after his inauguration, Trump appointed Mark Uyeda, a pro-crypto SEC Commissioner, as acting chair of the SEC. Shortly afterward, Uyeda announced that Hester Pierce would lead a new Crypto Task Force to develop a comprehensive and clear regulatory framework.

Then on Wednesday, Trump fulfilled his promise made to his crypto and libertarian constituents by pardoning Silk Road founder Ross Ulbricht. This was one of the definitive campaign promises that he made when he adopted pro-crypto rhetoric. Getting this done is a good sign that the admin plans to continue to execute on their pro-crypto platform.

The changing regulatory temperature is also reflected in the growing number of ETF applications, of which there are now over 30.

Many of these added ETF applications were likely delayed until a more favorable administration took office. Companies are clearly recognizing the shift in regulatory environment and are taking action.

Great Stress Test and Validation of Solana and the Casino Stack

Last week, we called SOL the “no-brainer” trade of this year, and the launch of TRUMP further solidified that view.

The decision to launch TRUMP and MELANIA on Solana is a resounding endorsement of the chain’s robustness, security, and scalability. Having the President of the United States choose Solana as the foundation for his eponymous token sends a strong signal to future projects—whether memecoins or more “legitimate” ventures—that Solana is a reliable platform for launching tokens.

The network faced a significant stress test during the launches, handling over $85 billion in DEX trading volumes between January 18^th and January 20^th.

Despite this enormous activity, Solana performed exceptionally well. The disruptions that occurred, such as wallet and exchange issues, were largely attributable to third-party infrastructure providers like Coinbase, Phantom, and Jito, rather than Solana itself.

The activity also benefited Solana’s ecosystem participants, particularly its so-called “casino stack” projects:

Raydium and Jito generated a combined $160 million in fees during the three-day period.

Raydium’s reflexive buyback mechanism repurchased over $10 million worth of RAY tokens on Saturday alone, bringing its total January buybacks to $37 million.

Final Thoughts

Overall, while the TRUMP token launch presents challenges for the industry’s optics and calls broader ethical matters into question, it also underscores a critical turning point for crypto in the U.S.

With Trump’s administration poised to support the industry, crypto stands to benefit from a more favorable regulatory environment. Interestingly, the token could evolve into an on-chain barometer of public sentiment, potentially reflecting Trump’s approval ratings in real time. Furthermore, the launch is a strong validation of Solana, which passed this stress test with flying colors. Despite the controversy, the TRUMP token launch highlights crypto’s deepening integration into mainstream culture and its growing influence on political dynamics.

Sell the Rumor, Buy the News

In our annual outlook last week, we talked a lot about how recent dollar strength and rising yields was weighing on crypto and a major cause of these tightening conditions was angst over potential tariffs.

It was our view that, much like Trump’s last term, that the market was pricing in the “worst case scenario,” and more likely than not, once Trump took office and we received clarity around trade policy that we would start to see yields and the DXY roll over.

Well, it is still early, but there is already compelling evidence of this taking place. Over the past few trading days, both the US 10Y and DXY appear to be relenting.

On Tuesday, the President announced that they were contemplating 25% tariffs against both Canada and Mexico. In a move that should logically send the dollar higher against both respective currencies, neither the peso nor Canadian dollar put in a strong move lower.

To us, this suggests that the market has already priced in a lot of fear about tariffs and trade policy. If the DXY and yields continue to roll over in Q1, as we expect, this would serve as a tailwind for crypto.

Flows Return

Over the past couple of weeks, we have seen flows pick up in a big way:

• While still below November and December levels, volumes have moved considerably higher.
• Stablecoin creations have picked up, with the aggregate change in stablecoin market cap over the past 7 days at over $6 billion.
• When combined with ETF inflows, it is clear that the movement of dollars back into the crypto ecosystem has picked up substantially.

Core Strategy

Recent developments since the inauguration suggest that the new administration is prioritizing an industry-friendly regulatory environment. We believe there is still significant upside headline risk in the early days of Trump’s term. Coupled with an easing DXY and yields, as well as substantial inflows into the crypto ecosystem, we think it’s prudent to maintain a long bias.

Tickers in this report: BTC -7.14% , ETH -8.72% , SOL -13.38% , JTO -19.52% , RAY -12.38% , BONK -15.32% , HNT -13.81% , AERO -12.81% , DOGE -6.18% , XRP -8.18% , VIRTUAL -20.27% , AI N/A% 16Z, USDC 0.02% , MSTR 0.12% , SMLR -5.68% , GDLC, BITW, COIN -3.64% , HOOD -8.74% , BRPHF, MARA -4.13% , RIOT -9.93% , WGMI -6.48% , CLSK -6.42% , WULF -9.40% , IREN -8.19% , CORZ -9.62% , BTDR -5.83% , BTBT -4.13% , HUT -5.79% , HIVE -3.42% , BITF -1.00% , CIFR -9.48% , TRUMP N/A% , MELANIA