Meme coins experienced a significant downturn over the weekend following the signing of long-anticipated tariffs by President Donald Trump on Mexico, Canada, and China. This move has initiated a trade war that has led investors to liquidate risk assets globally.
The “Official Trump” meme coin, launched a little over two weeks ago, saw a decline of 15%, dropping to $17 according to CoinGecko. This coin had previously surged to approximately $73 during the launch weekend but suffered a staggering 50% loss on Inauguration Day.
Among the most notable meme coins, Dogecoin and Shiba In each faced declines of about 14%. Pudgy Penguins experienced a 13% drop, while Dogwifhat plummeted by 26%. Overall, meme coins collectively fell by 17% in just 24 hours, as reported by CoinGecko.
The downturn began on Saturday evening, coinciding with Trump’s order to impose a 25% tariff on imports from Mexico and Canada, along with a 10% duty on imports from China. The United States conducts approximately $1.6 trillion in trade with these three countries.
James Davies, CEO and co-founder of the trading platform Crypto Valley Exchange, commented, “Every coin that recently rallied through January, including memes like Dogecoin, have essentially handed back most of their gains.” He emphasized that cryptocurrency fundamentally embodies the freedom to conduct trades, a principle that stands in stark contrast to the recent global political climate. “As a community, we are pro free trade… when that is being restricted, many investors adopt a risk-off approach, significantly affecting the altcoin market.”
Meme coins had previously emerged as some of the most significant beneficiaries following the U.S. presidential election, with many traders interpreting the political landscape as a catalyst for a new crypto craze. However, there are growing concerns that the latest meme mania, driven by Trump, may be overheating, potentially harming investors and causing misallocation of resources to less valuable projects within the industry.
In contrast to the sharp losses seen in the meme coin sector, Bitcoin’s decline on Monday was more restrained, with a decrease of just 3%. However, the cryptocurrency could face further challenges in the short term as the ramifications of Trump’s tariffs unfold in the marketplace.
As the landscape of cryptocurrency continues to evolve, the recent downturn in meme coins serves as a poignant reminder of the volatility inherent in the market and the broader economic factors that can significantly influence investor sentiment.
