The USA token soared by over 525%, raising its market cap to over $235 million. This has made investors shift their focus to political meme coins like Dogelon Mars (ELON) and American Coin (USA).
Similarly, the Dogelon Mars token soared by 126%, bringing its valuation to over $223 million. This surge caused by the Official Trump (TRUMP) meme coin surge, which has reached a market cap exceeding $10 billion.
Dogelon Mars and American Coin Are Soaring
Dogelon Mars rose because of Elon Musk’s close ties with Donald Trump, who is now in charge of the Department of Government Efficiency (DOGE). While American Coin rose because of the upcoming Trump inauguration, which coincides with Martin Luther King Day.
Moreover, Trump plans to use DOGE to slash government costs worth over $2 trillion over time.
Related: Donald Trump’s $TRUMP Memecoin Pays Off Big for Trader, Nets $126M
Why ELON and USA Tokens May Crash Soon
Here are some of the reasons why ELON and USA tokens may crash soon.
Firstly, Trump will be sworn in on Monday, a move that will generate a lot of hype in the US and other countries. He will then go back to work, and then everyone will embrace the new normal, and the hype will start to fade away.
Secondly, there is a concept known as buying the rumour and selling the news. This is a situation where investors buy an asset before a known event happens and then dump it. A good example of this is what happened after the SEC approved the spot Bitcoin ETFs. Bitcoin rose shortly after that and then entered a consolidation that lasted a few months.
Thirdly, insiders will likely start to sell the Official Trump coin since it lacks any new catalyst. Besides, Trump will be inaugurated soon, and most tier-1 exchanges like Binance, Bybit, and OKX have already listed it.
However, insider sales often happen when meme coins surge. This pattern is evident among most coins like Fartcoin, Popcat, Pudgy Penguins, ai16z, and Book of Meme. Many retail investors are left holding the bag when smart money and insiders sell. As shown below, the most profitable ai16z investors sold their tokens before the price crashed.
CONCLUSION
If the Official Trump coin crashes, the prices of Dogelon Mars and American Coin will undoubtedly experience a severe reversal.
Furthermore, there are broader market risks, including the hawkish Federal Reserve. The Bank of Japan (BoJ) is also expected to hike interest rates by 0.25% this week. The last BoJ increased rates led to the unwinding of the Japanese yen carry trade, which negatively impacted most tokens.
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