Former Coinbase CTO Warns Against Hype as Trump Meme Coins Ignite Market Criticism

Amid the ongoing frenzy surrounding meme coins linked to Donald Trump and Melania Trump, Balaji Srinivasan views this entire category of tokens as a form of gambling.

Some reps of the niche evolve into useful assets, admits Balaji, but most crumble post-crash, leaving late investors with significant losses.

Meme Coins: No Wealth Creation, Says Balaji

In his latest tweet, Balaji Srinivasan warned against the speculative frenzy surrounding meme coins, describing them as a “zero-sum lottery” with no real wealth creation.

He explained that every buy order in such coins is matched by a sell order, eventually leading to a price collapse where late entrants often lose everything. Srinivasan noted that meme coins can even be a “negative sum” when platforms take a cut.

While acknowledging that some have sustained value by adding use cases or building communities, he urged most investors to focus on long-term assets with intrinsic value.

“I agree that some meme coins have endured and actually built communities. I’d go further and note that quite a few of the top 100 coins are essentially ghostchains and de facto memevcoins. But very rapid price appreciation in a highly politicized environment has high potential for trouble. A lot depends on what happens after the first big price crash. There isn’t any one person to blame for DOGE.”

Srinivasan’s warning comes amidst the back-to-back launches of meme coins by Donald and Melania Trump, timed just before his inauguration. The latest events not only sparked investor curiosity but also drew significant criticism.

Market Criticism Mounts

The TRUMP token suffered significant double-digit losses just hours after the launch of MELANIA. The price drop drew sharp criticism from market observers. Edward Dowd, founder of Phinance Technologies, called it “the largest unforced error ever made before a Presidential inauguration,” expressing disbelief over the token’s decline.

Jim Bianco, president of Bianco Research, suggested that the launch of MELANIA backfired, tweeting that the market viewed it as dilution and feared Trump might have more coins planned, thereby undermining confidence.

Meanwhile, José Maria Macedo, co-founder of Delphi Labs, added that the rush to capitalize on the TRUMP token’s success reflected poor planning and greed among insiders. He speculated that those involved in TRUMP underestimated its potential, sold too early, and attempted to profit further with MELANIA. The result, Macedo argued, was the destruction of $30 billion in value, damage to public perception, as well as potential legal repercussions.