Trump is a crypto billionaire. Here's why he probably won't want to cash out anytime soon.
Getty Images; Jenny Chang-Rodriguez/BI
- The $Trump crypto token reached a $73 billion market value at its peak.
- CIC Digital, an affiliate of the Trump Organization, controls 80% of $Trump coins.
- Insider sales could hurt the coin's price, making it difficult for Trump to cash out his gains.
Donald Trump's full-throated embrace of crypto on the campaign trail culminated in the launch of his very own meme token shortly before his inauguration, but the president might have trouble cashing out on the dizzying gains from the $Trump coin.
The meme token was launched on Friday and had peaked by Sunday at a fully diluted market value of nearly $73 billion. The token has since plummeted by about 50% but still has a fully diluted value of about $38 billion.
In a matter of days, Trump has become one of the biggest crypto billionaires in the world — at least on paper.
CIC Digital, the issuer of the $Trump coin and an affiliate of the Trump Organization, controls 80% of the token's supply, worth about $30 billion as of Tuesday afternoon.
According to the token's official website, 10% of the remaining supply is for public distribution, and another 10% is for "liquidity." The website also says that 1 billion $Trump coins will be issued over a three-year period, with 200 million available currently.
While CIC Digital controls 80% of the token's supply, that doesn't necessarily mean it can sell that stake at current prices.
That's because a wave of selling would likely push down the price of the token significantly.
"Tokens held by insiders could distribute this supply, leading to losses for unsuspecting investors," Gautam Chhugani, an analyst at Bernstein, said of CIC Digital and its holdings of the $Trump token.
Investors have seen this with Trump-linked assets before, particularly with volatile trading in the shares of Truth Social's parent company, Trump Media & Technology Group.
Trump owns about 60% of Truth Social shares, and when his lock-up period expired in September, the stock plunged on fears that he would unleash a wave of selling that would overwhelm any demand for the stock.
When Trump said he had no plans to sell Truth Social, the share price bounced higher.
The same dynamic applies to the president's meme coin. Any inclination that CIC Digital insiders will sell the token would likely create downward momentum for its price.
"Given how fast the token reached a stratospheric market value, the 80% supply held by insiders does create some pressure on its market value," Chhugani said.
The analyst added that while meme coins come and go, a token associated directly with the president probably has more staying power than most. However, the ownership structure may make it less appealing.
"In this case, a meme coin capitalizing on Trump's brand and politics has potential longevity but would depend on the potential token design to make it less extractive due to 80% insider supply by the Trump affiliates," Chhugani said. "The Trump team followed up with a new coin launch called $Melania, and the market reacted negatively to the further dilution of the brand with market participants perceiving it to be extractive."
Correction: January 21, 2025 — An earlier version of this story misstated when Donald Trump's lock-up period expired for Truth Social stock. It was in September, not earlier this year.