Is Melania Trump's Meme Coin a Buy?

On Jan. 19, First Lady Melania Trump launched the Official Melania meme coin on the Solana (CRYPTO: SOL) blockchain with the ticker $MELANIA. She followed in the footsteps of President Donald Trump's Official Trump meme coin, also launched on Solana a couple of days before, with the ticker $TRUMP.

In the hours after its launch, the coin rose to reach a value of $1.9 billion. It has since plunged and now has a market cap of about $450 million, making it a midsize meme coin, and leaving many early buyers deeply underwater on their investment. Should you rush to grab a bargain, or is caution warranted?

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A new era of meme coins is beckoning

It's undeniable that the first-ever official meme coins of the president and his family mark a major turning point for the cryptocurrency ecosystem, and meme coins especially.

These assets are more than just a lark now; they're a way for people to express their values, participate in communities, and financially mark their allegiance to certain social or political movements. There's not much better validation for meme coins becoming mainstream than members of the first family having tokens of their own. Make no mistake, this is uncharted territory in the history of financial markets and cryptocurrencies, and it's not clear what all of the implications of this new paradigm will be.

But it's important for investors to evaluate whether these emerging assets are actually worth their money, and Melania's coin is no different. So, is there an investment thesis for buying this token?

If there were one, it would need to outline the mechanism by which the coin could gain value from its present level over the long term. Furthermore, it would need to describe why the risks associated with an investment are either low, or how those risks are justified considering the potential upside. It would also be nice if the thesis explained why the token is presently valued in the way that it is, as that would help investors cope with the high levels of volatility that it has displayed so far.

Try to articulate these factors to yourself before proceeding to the next section; the act of doing the exercise is important.

You really shouldn't buy this one

As you may have realized, it is very difficult to formulate a sensible thesis for why Official Melania is a coin you should buy. That means you shouldn't buy it.

With that said, here's my best stab at a thesis.

Given that Melania Trump and the team responsible for the coin have a financial and reputational interest in making it succeed, they may be able to conduct marketing campaigns or take other actions that support the price by attracting new capital. Now that the initial dumping of the token has largely concluded, investing now is comparatively lower-risk than in the first couple of days after launch. And it's doubtful that project will be abandoned outright, so there should be a floor on its price. And if the first lady can garner sufficient attention during the next four years, it's possible that some of people will be interested in buying her coin to communicate their support and maybe get some financial upside along the way.

This argument isn't seem very persuasive. Still, it's important to note that most meme coins aren't backed by a team led by the first lady, so be aware that Official Melania might still perform better than one might expect. And with memes, emotional salience is sometimes enough to drive a sharp run-up, even if it means a highly volatile ride for holders, and even if prices tend to be just as fickle as people's emotions.

Regardless, if you're looking for an investment within cryptocurrency that stands to gain a lot from the launch of coins like these, buying Solana is a better option.

Remember, because Official Melania is hosted on Solana, every single purchase of the coin requires injecting some cash into the Solana ecosystem. Therefore, if you believe that these presidential family meme coins will succeed, or that meme coins in general are going to continue to gain even more popularity, you don't need to take on the extreme risks of making direct investments if you buy and hold Solana.

It probably won't be as thrilling as investing in the memes themselves, but your portfolio will thank you for it, especially if you hold the chain's coin for at least a few years or more.

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Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.