Memecoin, Voice Of Crypto
US presidential candidate Donald Trump is generally considered pro-crypto compared to Kamala Harris.
However, analysts warn that a Trump presidency could adversely affect the memecoin market.
With mainstream cryptos having more room to grow under Trump, analysts believe investors will begin to abandon memecoins.
Meanwhile, analyst Willy Woo believes that altcoin season strengths will wane as the market matures.
The US presidential election draws closer with each passing second. With it, discussions are heating up about how exactly a Trump or Harris presidency could affect crypto.
Memecoins have been a major source of controversy in these conversations.
If either candidate wins, what will their approach towards the memecoin market be?
According to financial experts, a Trump administration could be bearish for memecoins.
Given Trump's open endorsement of this interesting class of cryptos, let's see how this might happen.
According to insights from Omid Malekan, a finance professor at Columbia Business School:
Memecoins stand as more than mere "risky investments."
Instead, they represent a form of "economic populism". Malekan argues that these coins serve as a kind of "counter" to the "unfair tokenomics" often enjoyed by venture capital-backed tokens.
Insights from Omid Malekan
The analyst also mentioned that he believes a Trump administration that promotes crypto-friendly regulations could have adverse effects on the memecoin market.
With mainstream cryptos becoming free to be traded under less regulation, investors may shift their focus towards Dapps and utility-driven projects.
This would leave the memecoins hanging and lead to lower investor interest.
Malekan, in essence, is saying that more "regulatory sanity" would dent the appeal of memecoins and turn the spotlight back towards more "relevant projects."
At the end of the day, the memecoin industry could be in for a prolonged bear market.
Nic Carter, a partner at Castle Island Ventures, agreed with Malekan’s concerns.
Carter pointed out that many memecoins rose as a response to the US’ strict regulations from agencies like the SEC.
If the regulatory landscape in the US becomes more lenient towards crypto, this could diminish the appeal of memes altogether.
In his words, this could lessen the need for "retail traders to gravitate towards memecoins."
It would also open the doors for projects that were previously under the SEC's shadow to grow.
Throughout his campaign, Trump has promised to make the US a "crypto hub."
His promise to make the country the "world capital of crypto and Bitcoin” has already stirred up much excitement, with several polls showing that voters are more likely to vote for a candidate with more pro-crypto policies.
Despite the bearish outlook from these experts, many others believe that politics have nothing to do with the memecoin market.
Murad Mahmudov, for example, stated that traders are more likely to make decisions based on market dynamics than politics.
In a recent tweet, he stated that the popularity of memecoins is largely tied to the expanding global money supply.
This encourages spending habits among consumers and makes them more likely to bet on speculative markets.
Said behavior Is unlikely to change, according to Mahmudov, regardless of who holds office.
Memecoin traders don't care.
Director at Sei, Mike McCoy, added that memecoins are popular because they offer a chance to make money from the market's volatility.
According to McCoy, this opportunity is rare in traditional markets (and even in the crypto market).
As a result, many traders are becoming less interested in established coins, considering that they have far less growth potential than the memecoins.
According to McCoy, even a crypto-friendly shift isn't enough for these traders to change their minds.
In general terms, the altcoin market has its own troubles.
According to recent insights from analyst Willy Woo, "altcoin seasons" are expected to continue.
However, the strengths of these altcoin booms will likely wane as time goes on.
Woo says that the market is maturing. This means that while the alt seasons will continue, they are likely to fall short of previous market cycles.
The analyst says investors chasing returns might consider shifting towards high-risk, low-cap tokens after Bitcoin surges.
Bitcoin’s dominance, he argues, is the key signal for altcoin rotations.
Altcoin strength might wane.
Woo says that the current altcoin season is mainly driven by memecoins.
This has turned the market into a “casino” where “the house always wins” instead of a space for technological innovation.
As a result, the analyst advised against holding on to altcoins for the long term, with the only exceptions being investors who have insider-level knowledge.
With less than a week before the elections, it remains to be seen how much influence politics will have on crypto.
Experts generally believe a Trump presidency will improve the regulatory landscape and reduce the appeal of memecoins.
While there is some evidence that investors will continue chasing high-risk tokens, analysts believe the market's maturity will bring more changes over the years.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.