Memecoins Crash After DOJ Probe Into Trump’s Crypto Gala Spurs Panic and Market Sell-Off
Memecoin markets experienced heightened volatility following political controversy surrounding former President Donald Trump’s association with a crypto-themed dinner event. Initial criticism from a U.S. senator, who argued that such events undermine financial market credibility, was followed by a direct call from lawmakers for the Department of Justice to launch an investigation. This escalation triggered significant panic across the broader cryptocurrency market, with Bitcoin dropping 4.5% and meme token market capitalization plunging 7.5%. High-profile memecoins like PEPE, TRUMP, WIF, and FLOKI faced losses ranging from 9% to 12.5%. Overall trading volume in the meme sector dropped by over 10%. The rapid market-wide sell-off resulted in $598 million in total crypto liquidations, the majority ($508 million) from long positions, indicating that bullish traders were caught off guard by the regulatory headlines. Despite the sharp decline, exchange outflows of tokens such as PEPE and TRUMP suggest possible whale accumulation, pointing to potential interest from large holders at lower prices. Technical analysis indicates that further downside remains possible if negative sentiment continues, though established support areas may offer rebound opportunities should buying momentum return. This event underscores the intense sensitivity of meme coin prices to political developments and regulatory news, signaling to traders the importance of closely monitoring external factors beyond typical market indicators.
Bearish
The Department of Justice investigation into Donald Trump’s crypto dinner has triggered significant panic and sharp declines across the memecoin sector and the broader crypto market. This regulatory action led to a notable sell-off, a steep drop in market capitalization, and large-scale liquidations, especially among long positions. These developments expose the vulnerability of sentiment-driven memecoins to negative regulatory headlines and political controversies. While whale accumulation of certain tokens hints at potential for a rebound if sentiment improves, the prevailing trend is clearly downward, driven by heightened uncertainty and risk aversion. Unless there is a positive resolution or reversal in sentiment, further declines remain likely, making the short-term to medium-term outlook bearish for affected memecoins.