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A few weeks ago my 27-year-old daughter mentioned she’d been hearing a lot about memecoins. That conversation sparked this text, which I wrote for her first and then revised for HD. I hesitated over the slight political connotation, but on reflection the underlying lesson feels too useful not to share.
Do you remember inauguration week? January 2025 didn’t just mark a political transition, it also launched a brand new cryptocurrency: the $MELANIA memecoin. It arrived with fanfare, exploded in popularity, and within days its total market value had reached billions. On paper, early buyers were making a fortune.
Who wouldn’t want a slice of the action? So what happened to the average Joe who, after a few weeks on the sidelines, decided to take a punt? By that point the token was trading around $13.50, and a $1,000 stake bought roughly 74 tokens. Maybe it could double, maybe those 74 tokens could hit $100 each. Anything seemed possible in the full euphoria of the moment.
It wasn’t. Early investors took profit, and within a week that $1,000 had dropped 60% to around $400. Here’s where the psychology gets interesting. Selling at that point meant locking in a real, painful loss, so many investors reached for a classic defence mechanism: just hold on until it recovers to what I paid.
The problem is the recovery never came. By spring, the inauguration was ancient history, the media had moved on entirely, and the token had drifted to a single dollar. That $1,000 was now worth $74. Today it trades at just over eight cents, and the original $1,000 is worth $5.92, a loss of 99.4%.
The real tragedy isn’t just the lost capital. It’s the slow, grinding realisation of how the structure of the game was working against the investor from the very start. Memecoins produce nothing, generate no cash flow, and pay no dividends. They run entirely on the greater fool theory, the hope that someone else will pay more than you did.
When you buy into a real business, you are partnering with actual earnings and economic productivity. When you buy into a celebrity hype cycle, you are frequently just funding someone else’s exit. That final $5.92 is a small but expensive reminder of the difference between investing and gambling.
You are right Mark there is a bit of politics involved in the post but you walked the tightrope brilliantly and kept the post objectively about finance. Bravo!
Companies thrive and some fail, but for the most part, we know they sell a product. Based on their ability to sell this product for less than it costs, they earn profits that the investors hope will trickle down to them. Precious metals has some value and you can actually hold measure the item. For these coins, we know the story and it is likely one that doesn’t end very well. Blockchain may very well have some type of value in transaction verifications and so forth, but the blind faith put into these coins make little sense to me. It is clearly hype, yet some have made millions!
I was going to opine that young minds seem more susceptible to such schemes, but I know lots of adults that got caught up with Iraq dinars. I hope your daughter listens to dear-old-dad, rather than learn the lesson with her own money.