The first wave of memecoin-based exchange-traded funds (ETFs) is gaining traction, partly due to new leadership at the US Securities and Exchange Commission.
The crypto industry has seen an uptick in memecoin ETF filings following the launch of the Trump family’s memecoins, which have attracted significant retail attention.
The SEC received its first filings for an Official Trump (TRUMP), Dogecoin (DOGE) and a Bonk (BONK) ETF, Cointelegraph reported on Jan. 21.
The approval of memecoin-based ETFs is more likely under the new acting SEC Chair Mark Uyeda, who replaced Gary Gensler, according to Dmitrij Radin, the founder of Zekret and chief technology officer of Fideum crypto regulatory and infrastructure firm.
“The approval of TRUMP, BONK, and DOGE ETFs is more likely now with Trump’s new crypto-friendly SEC picks,” he told Cointelegraph. “It’s a bold move, potentially bringing more liquidity and mainstream acceptance to memecoins.”
However, Radin cautioned about the volatility of these tokens:
“But let’s not forget that these memes ride on cultural momentum and speculative frenzy, missing the underlying value and leading to extremely high volatility.”
The memecoin ETF filings follow the launch of the TRUMP token on Jan. 18 and the Official Melania (MELANIA) token on Jan. 19. These tokens reportedly brought over 200,000 new users onchain, according to Moonshot, the platform promoted by US President Donald Trump for purchasing his memecoin.
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Memecoin frenzy’s speculative upside reminiscent of GameStop saga
Despite bringing an influx of new users, the TRUMP token has struggled to gain momentum.
TRUMP/USD, all-time chart. Source: CoinMarketCap
TRUMP fell by over 14% in the 24 hours to the time of writing to trade at $35.81, around 52% down from its all-time high of over $75 recorded on Jan. 19, CoinMarketCap data shows.
Related: Trump family memecoins may trigger increased SEC scrutiny on crypto
While a potential ETF could bring more institutional investment and stabilize the price volatility of the underlying memecoin, it still presents significant risks for investors.
Radin said memecoin price action is dependent on trends and fueled by retail speculation.
“Investing in such products is more of a play for those looking to capture the speculative upside, similar to betting on a small-cap stonk before it takes off,” Radin said. “It’s crucial to remember the lesson from the GameStop saga: When the hype fades, the drop can be severe,” he added.
While Radin called the memecoin ETF filings an “intriguing experiment for crypto,” he warned that the price performance of these coins is dependent on cultural participation.
Meme-based investing gained increased retail popularity with the first GameStop short squeeze in 2021, which saw GameStop stock price soar by over 1,000% in a month.
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