In this brief political rant, we explore the absurd nature of Trump's "memecoin."

Written by: BitMEX Research

This article was inspired by Demetri Kofinas's appearance on Grant Williams's excellent podcast a few weeks ago, where he expressed a negative view on political memecoins, as well as Arthur Hayes's recent engaging article titled "Zero Knowledge Proof," which takes a somewhat positive stance on political memecoins.

We first outline Demetri's perspective that the shamelessness and absurdity of the Trump memecoin are striking.

This is completely insane. You are the President of the United States! This was once the most illustrious position in the world, working in the Oval Office is an incredible privilege, an opportunity to bring about change. You are over seventy years old, and this is your chance to impact the world, leave a legacy, and change people's lives. And yet, you are launching a memecoin!

The launch of the Trump memecoin is particularly disturbing because Trump was elected on a platform related to national revival. So, when he took office, the first thing he did on inauguration day was to launch a memecoin. This is like a punch to the gut.

Memecoins, at least in the eyes of some, are the dirtiest, most useless, and most foolish part of the cryptocurrency ecosystem, which itself has gained notoriety for scams, and this reputation is not unfounded. Memecoins are extreme examples of financial absurdity, speculative bubbles, and greed. Perhaps it is somewhat understandable that teenagers are interested in such things, or that a disgraced Nazi rapper might dabble in memecoins. But the President of the United States! How did we get to this point? How can the President escape all of this politically and legally unscathed?

Trump is not just a madman or an unexpected or random event. Trump is the result of decades of bad policies and blatant corruption from our political leaders. As Demetri pointed out, when people question $TRUMP, there is always someone who says:

"Look at Biden, look at Hunter Biden. He was on the board of Burisma. What does he know? Biden let him in."

Grant Williams seems to agree with this view and mentions the lies about Iraq's weapons of mass destruction (WMD) in 2002 and the 2008 global financial crisis (GFC) as other factors that led to a massive loss of public trust in the political system, which made $TRUMP possible.

Therefore, when the fact that no weapons of mass destruction were found and that the entire invasion was completely unnecessary truly came to light, there may have been enough high-level and powerful people who could not escape blame, and this matter was hastily covered up, with nothing done and no one punished. Yes, we conducted investigations, but that was merely a cover-up of the truth. People felt angry because they felt… no matter how you view humanity.

Not bearish, but cynical

Grant continues to discuss how this loss of trust has led to a loss of moral values. In his view, everything is now about making money in a bubble of greed and speculation. Rather than being bearish on these bubble markets, he has developed a broader cynicism towards Western values.

"It's interesting, this idea of being bearish when the market is rising, going back to 2008, and the lack of consequences that followed. I think this idea of 'bearishness' has become clearer to me personally now. And it's not about being bearish on the market. It's about being bearish on society. It's about being bearish on what happens when we reach that moral vacuum you mentioned. The idea is that if 'numbers going up' becomes the only thing that matters, it leads to OnlyFans, and all these terrible women flaunting how many men they can sleep with in a day online, and being proud of it, all for attention. You look at those so-called 'influencers,' and it's a complete moral vacuum."

"I think I'm only now starting to really understand what my own 'bearishness' is about, because I haven't been without investments over the years, and I'm not sitting on a pile of gold and canned food waiting for the apocalypse. For me, it's an attempt to discuss something beyond what will go up tomorrow. And that's important to me. Because there are already enough places talking about 'numbers going up,' but not enough places where you can hear meaningful conversations about meaningful topics, rather than ending with 'So to sum up, here's a three-letter acronym you need to buy to make money from this conversation.'"

Demetri then agrees with Grant and expresses a negative view on cryptocurrency.

I'm not trying to overly criticize cryptocurrency, but…

Experiencing this unique situation in the cryptocurrency industry is indeed thought-provoking. All the smart people I know who have made money in this industry know that it's almost all a scam, almost all a pyramid scheme, almost all driven by a pyramid model. If you've been in the cryptocurrency space long enough, you remember when people really believed that most of these things would amount to something. Maybe they will eventually be useful—if enough money is invested and enough government regulatory support is obtained. Blockchain and other distributed ledger technologies (DLTs) can indeed achieve certain applications in finance. But in my view, the amount of capital and wealth generated so far is not enough to justify its legitimacy. I worry, and have openly expressed this concern, about what this means for our economic success in the long run. If we put all our efforts and capital into an economic sector that can only produce limited returns, what exactly are we doing? The Chinese are not doing that.

All politicians should have a memecoin

Arthur Hayes, the Chief Investment Officer of Maelstrom, holds a more positive view on $TRUMP. In his recent article, he explains how memecoins usher us into a new political era—a more competitive and dynamic era. In this era, emerging political leaders can fund their campaigns by issuing memecoins, gaining public office while also getting rich. The price of the memecoin would reflect the political fate of the relevant politician.

Like Demetri and Grant, Arthur also mentions the corruption issues surrounding Hunter Biden, but he explains that memecoins actually improve the situation, allowing politicians to profit from public office in a more transparent manner.

"This is much better than the Biden family filling their pockets through a series of secret payments from foreign companies to various super-secret corporate entities. Of course, if the person passing the cash is a junkie, then these should be super secret."

Arthur's point is technically correct. Transparency is a good thing, so grassroots corruption that is transparent is better than the hidden top-down corruption from large corporations or Ukrainian gas companies. But with the emergence of memecoins, "the veil has been lifted." Under Biden's corruption, half the country could pretend that everything was reasonable. And now, everyone knows the system is corrupt, and everyone knows that others know. This could lead to a more turbulent political situation. This is undoubtedly a bad thing! No matter how obvious it seemed that some "junkie" in America knew nothing about the Eastern European energy sector, some people just couldn't see it. Whether it's Twitter blocking private messages on the topic or simply willfully ignoring it, some people were able to pretend that the government was serving the people. And now, everyone knows, and everyone knows that others know. To some extent, the rules of the game have changed.

Trump allocated 80% of Trump coins to himself, which critics see as a symbol of corruption. However, as Arthur mentioned, this issue can be resolved for other politicians.

"The simplest way is to distribute 100% of the tokens at issuance. Then, if politicians want to believe in themselves, they have to enter the market at the same price as everyone else."

A conservative view on memecoin prices

As for whether the price of political memecoins should reflect the career or popularity of politicians, Arthur's view is simple:

"People buy $TRUMP because they want to be part of the Trump supporter community, or they believe Trump will be more popular in the future. That's it. There’s no complex economic or financial theory to understand. You don’t need to know algebra, basic calculus, statistics, or probability. You just need to think and feel like a passionate human being. Therefore, anyone can understand what gives political memecoins value."

We tend to take an old-fashioned, boring, traditionalist, value-investor type of view, which may be closer to Grant and Demetri's stance. Why should the price of a memecoin follow the popularity of a politician? Isn't that just a silly speculative game? The price will surely deviate significantly from political reality.

"Vote for me, I don't have a memecoin"

Rest assured, we believe a dystopian political future is unlikely to emerge. In such a future, every politician would need to have a memecoin to have a chance of winning elections. A new generation of politicians could rise, using "no memecoin" as a unique selling point. These politicians could claim they are running for the right reasons, not to get rich, but to help the people.

Trump and his supporters have been promoting DEI (Diversity, Equity, and Inclusion) heavily. Nowadays, criticizing DEI has become the easiest path to gaining support and the most obvious entry point. But has DEI really become so pervasive that it causes lasting damage to economic productivity? We think not. Perhaps a larger economic issue is that people dream of getting rich quickly through speculative financial instruments like memecoins. Why work hard from nine to five when you can speculate from home and enjoy the fruits of misallocated capital in political finance (PoliFi)?

Trump's economic revival plan

In addition to launching a memecoin, Trump also plans to introduce a series of exchange-traded funds (ETFs), including two Bitcoin-related ETFs:

• Truth.Fi Bitcoin Plus ETF
• Truth.Fi Bitcoin Plus SMA

This is yet another obvious opportunity for corruption. What will Trump discuss the next time he meets with Sheikh Mohammed bin Zayed of Abu Dhabi? Trump might ask him to redeem his $437 million investment in BlackRock's $IBIT and instead invest in Trump's Bitcoin ETF. This is what they call the art of the deal.

As for whether the optimism sparked by Trump and the strategy of making corruption more public and transparent will truly "make America great again," time will tell. However, please call us cynics; we believe that Trump's memecoin or other cryptocurrency-related plans may become obstacles rather than aids.

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