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With the new White House bullish on crypto, it’s reasonable to expect a deluge of money piling in, but some are warning retail investors to prepare for a volatile ride.
“The other side of the story is that these meme coins are really embarrassing,” NYU professor and Hudson Bay Capital senior advisor Nouriel Roubini said to Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid podcast (see video above; listen below).
Roubini knows a thing or two about keeping it sober during hot markets. In 2006, he gained the nickname “Dr. Doom” when, at the height of the housing market boom, he warned of a coming recession.
Meme coins are trendy prospects in the cryptocurrency space. They often generate buzz initially but can turn out to be unsustainable longer-term. Last Friday, then-incoming President Donald Trump announced a new cryptocurrency aptly called Trump (TRUMP-OFFICIAL-USD). The family followed up with a Melania coin (MELANIA-OFFICIAL-USD) a few days later.
Trump coin surged to a market cap of $73 billion within 48 hours of its debut, beating out DOGE as the most valuable meme coin. But it soon dropped and is now worth around $7 billion on Thursday. Melania coin hovers in the $700 million range.
“Even supporters of Trump on X have said that two days before inauguration you learn something that is totally vaporware based on whatever and reaches peak value,” Roubini said. “There’s massive nepotism. There’s a massive conflict of interest. This is disgusting.”
These surges, he continued, often leave early insiders with the spoils while those getting in too late are left with the scraps. “People buy at the peak and then you already correct by 50%. The insiders make the money and sell it and the retailers get screwed,” Roubini said.
On Tuesday, Anthony Scaramucci, former Trump Cabinet member and the founder of Skybridge Capital, shared dismay about Trump meme coins with Sozzi at the World Economic Forum in Davos, Switzerland.
Calling the investments “gambling tokens” and a "clearing station for bribery," he said, “Our society is always going to have smoking and alcohol. But he's the leader of our country, and he does represent something to the rest of these countries, at least the institution of the presidency once did. So I don't like it."
Roubini predicted a "big bubble" in crypto could follow these volatile meme coins. “There’ll be another deflation of it, and then you’ll have the same cycles of people buying at the peak, then it corrects and they sell at the bottom,” he said. “They’re going to lose their shirts.”