The Associated Press has confirmed that Donald Trump has won the 2024 election, which is certainly the most notable news item on every investor's radar, and one that is clearly moving a number of asset classes in today's session.
Among the most notable movers in the world of cryptocurrencies today are meme tokens, which are absolutely skyrocketing following this news. Bonk (BONK -5.26%), Dogwifhat (WIF -16.31%), and Pepe (PEPE -5.49%) have surged 16.1%, 13.3%, and 13.2%, respectively over the past 24 hours, as of 3 p.m. ET. These moves are certainly large, even for these meme tokens, and momentum is clearly on the side of bulls at least for now.
Let's dive into what this Trump presidency could mean for these tokens in particular, and why they're moving in the fashion they are today.
Meme token mania is back
One of Donald Trump's core election promises has been to push for more of the innovation and blockchain development seen in the world of crypto to happen on U.S. soil. That thinking certainly makes sense, and given this is a global market, his push to become a very pro-crypto candidate clearly boosted his numbers among many younger voters and those who want to see higher crypto prices coming out of this election.
His promises of creating a strategic national crypto stockpile and creating a more favorable regulatory environment to encourage more blockchain development in the U.S. has led to expectations that a flood of capital could be coming to the crypto sector.
For meme coins, that would certainly be beneficial. These tokens (Bonk, Dogwifhat, and Pepe included) benefit from capital inflows into exchanges. And with relatively smaller floats and market capitalizations, the higher-volatility nature of these crypto assets can mean short-term spikes that far outpace the overall market. At the time of writing, the overall crypto sector is up more than 7% -- still a large move, but one that pales in comparison to how these assets tend to perform during hype-driven manias.
Can this momentum continue?
The key question of whether meme tokens such as Bonk, Dogwifhat, and Pepe can continue to surge really has a lot to do with how long this momentum-driven rally can be sustained. Each of these tokens are up more than 700% over the past year, with Bonk surging more than 3,000% (a 30x) and Dogwifhat up more than 1,300% (a 13x). The momentum has been strong, and for quite some time. For many investors, this market is starting to look at lot more like 2020 and 2021 when other earlier meme coins came to center stage and took over the discussion of many smaller retail investors.
I'm skeptical that institutional capital will flow into these tokens, for the simple fact that spot ETFs are only approved for Bitcoin and Ethereum as of now. However, I do think retail traders and speculators will continue to bet that this rally will continue until overwhelming evidence surfaces that another so-called "crypto winter" is on the horizon.
For now, things feel like spring has sprung, and it's balmy summer weather out there for crypto enthusiasts. These three meme tokens may not be ideal candidates for most fundamental value-conscious investors. But they're going to provide a meaningful bellwether for all investors who are trying to discern how the market is feeling at a particular point in time. Right now, investors appear to be among the greediest they've been in some time, something that is clearly making investors like Warren Buffett feel the need to be among the most fearful he's been in some time.
