Zinger Key Points
- Bernstein notes a stark contrast to the initial positive reception, now focusing on potential for insider-driven market manipulation.
- The report identifies uses like collateralization, engagement strategies, and political treasury applications for the token.
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A new report from Bernstein says that the cryptocurrency market will closely examine the utilization of 80% of the Official Trump TRUMP/USD token supply held by Trump insiders in the coming days.
The TRUMP token, launched unexpectedly on the Solana SOL/USD blockchain, reached a fully diluted market cap of approximately $73 billion. It traded over $30 billion in a day within 48 hours, surpassing Dogecoin DOGE/USD as one of the largest meme coins in the market, before experiencing a drawdown of about 50% from its highs.
The token’s launch was facilitated by CIC Digital, an entity associated with the Trump campaign, which had previously launched branded NFTs and merchandise.
Also Read: Coinbase Launches Bitcoin-Backed Loans For US Users
While the industry has viewed the token launch by the “strongest political figure” as a sign that the US is more open to digital assets and that regulatory risk might be lessened, the Bernstein report shifts the focus to the token distribution structure.
The report points out that 80% of the token’s supply is held by wallets associated with CIC Digital, raising concerns that these insiders might distribute this large supply, leading to losses for other investors and creating pressure on the token’s market value.
“The team could use TRUMP coin as collateral to build something useful in crypto banking & finance or build an
engagement model to reward supporters/holders. Or it could use it as a treasury asset to fund more Trump-related political initiatives,” the report stated.
Given how blockchain-based market-making works, the team is already earning strong revenue from supplying liquidity to trading pools. Given how fast the token reached a stratospheric market value, the 80% supply held by insiders does create some pressure on its market value,” it further said.
The report also touches upon the regulatory environment. It suggests that the launch of a token by a major political figure signifies a new era where governments may view crypto as a tool to reach out to the masses.
Despite this potential shift, the report cautions that the current regulatory regime in the U.S. has been about cracking down on crypto builders and enforcement actions on token-related activities.
The president's token launch therefore signals a new era and may lead to new regulations.
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