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Author: Tom Maloney, Annie Massa, Source: Bloomberg, Compiler: Luffy
Cryptoassets have transformed President Donald Trump’s family’s fortune during his second term.Today, the Trump family and their followers are experiencing firsthand the extreme volatility inherent in cryptocurrencies.
Since August, the value of TRUMP, a memecoin named after Trump, has fallen by about a quarter; Eric Trump (President Trump’s second son)’s holdings in a Bitcoin mining company have shrunk by nearly half from the peak; and Trump Media Technology Group, which started hoarding Bitcoin this year, has seen its stock price fall to near historical lows.
On September 16, Eric Trump spoke at the Nasdaq bell ringing ceremony of American Bitcoin Company
The recent wave of selling is part of a broader rout in the cryptocurrency market that has wiped more than $1 trillion off the entire crypto asset market value.According to the Bloomberg Billionaires Index,The Trump family fortune has shrunk to about $6.7 billion from $7.7 billion in early September, a decline directly related to the family’s growing cryptocurrency-related investment portfolio.
These investments involve complex transactions that go far beyond direct bets on cryptocurrencies.Ordinary investors now have more channels to participate in Trump-related crypto projects and may therefore face greater losses.For example, any speculator who bought TRUMP during the price peak after Trump announced the launch of the memecoin over the weekend of his inauguration would have lost almost the entire value of their investment by this month.
Eric Trump said he is still confident.He has repeatedly urged investors to double down on their purchases, a view he has maintained even during cryptocurrency market downturns.
“This is an excellent buying opportunity,” he said in a statement to Bloomberg News. “Those who buy the dip and embrace volatility will be the winners. I have never been more optimistic about the future of Bitcoin and the modernization of the financial system.”
It’s true that Bitcoin has experienced a number of major slumps since its inception in 2009, only to eventually rise again over time.However, there is a buffer mechanism for the Trump family’s crypto asset holdings.Even though their holdings of tokens and stocks of crypto-related companies have plummeted, there are still other ways to profit from participation in the cryptocurrency industry.
Take the crypto project World Liberty Financial they co-founded as an example: Although the book value of the related tokens held by the Trump family has shrunk, they are still entitled to a proportional share of the proceeds from the token sales regardless of price fluctuations.
「Retail investors can only speculate;” Jim Angel, professor of finance at Georgetown University, said, “The Trump family can not only speculate, but also issue tokens, sell tokens and profit from these transactions.“
Here’s an overview of how the Trump family’s crypto-related assets performed during the plunge.
Trump Media Technology Group: Loss of $800 million
Shares of Trump Media Technology Group, parent company of the Truth Social platform, hit a record low on Wednesday.Part of the reason for this drop may be poor timing of its cryptocurrency investments.
Trump’s holdings in the company have lost about $800 million in value since September.He is the company’s largest shareholder, holding shares through a trust fund overseen by his eldest son, Donald Trump Jr.
Shares of Trump Media Technology Group plunge 66% in the past year
Trump Media Technology Group, which is not yet profitable, has been experimenting with a number of new businesses, including in the cryptocurrency space.The company has spent about $2 billion buying Bitcoin and options, according to a July statement.The purchase price of approximately 11,500 Bitcoins held by him is approximately US$115,000 per coin, and the position has currently suffered a cumulative loss of approximately 25%.
Additionally, the company has begun hoarding CRO, a niche token issued by Singapore-based cryptocurrency exchange Crypto.com.Trump Media’s CRO token holdings were worth about $147 million as of the end of September, and have since lost nearly half their value.
Trump Media has also partnered with Crypto.com on other businesses, and the two parties plan to launch a prediction market platform called Truth Predict that will allow users to place bets on sports and political events.
World Liberty Financial: Paper losses of nearly $3 billion
The Trump family’s core crypto project, World Liberty Financial, issued its own token, WLFI.The token price has fallen to about 15 cents from 26 cents in early September.
The WLFI token held by the Trump family had a book value of nearly $6 billion at its peak, but has now shrunk to about $3.15 billion.(These tokens are not included in the family wealth valuation of the Bloomberg Billionaires Index as they are currently locked and cannot be traded.)
World Liberty Financial official website
In August, the company sold some tokens to Alt5 Sigma Corp., a small public company.The timing of the sale was perfect: World Liberty Financial received $750 million in cash and some equity from the deal.
But Alt5 investors may not be equally lucky.Alt5 shares have fallen about 75% since the deal was announced.
The Trump family’s stake in Alt5, held through World Liberty Financial, lost about $220 million in value but still profited from the deal.According to Bloomberg calculations, the Trump family received about 75% of the proceeds from World Liberty Financial’s token sales, taking in $500 million from the Alt5 transaction alone, and about $400 million previously from the WLFI token sale.
“Cryptocurrencies are here to stay,” a World Liberty Financial spokesperson said in a statement. “We have long-term confidence in the rapidly maturing technologies that underpin crypto-assets and believe these technologies will revolutionize the financial services sector.”
American Bitcoin: Loss of at least $330 million
About two months after Trump took office, his family dabbled in yet another new crypto project.Eric Trump and Donald Trump Jr. entered into a complex series of transactions with crypto company Hut 8 Corp.: Hut 8 traded its own Bitcoin mining rigs for a majority stake in a newly formed company, American Bitcoin Corp.
Eric Trump holds about 7.5% of American Bitcoin, a company listed on Nasdaq (ticker symbol ABTC), and Donald Trump Jr. holds a small undisclosed stake.
ABTC shares peaked at $9.31 in early September, when Eric’s holding was valued at approximately $630 million.The stock price has since fallen by more than half, reducing the family fortune by more than $300 million.Still, the deal is one of the clearest examples of the Trump family making hundreds of millions of dollars in new wealth through recent crypto-related businesses.
If investors had bought ABTC shares when they were listed, they would have lost 45%.An ABTC spokesperson did not respond to a request for comment.
Trump memecoin: Loss of nearly $120 million, $220 million in tokens unlocked
The memecoin has continued to plummet since its launch was announced over the presidential inauguration weekend, and has lost a further roughly 25% since the end of August.
The size of the Trump family’s holdings in the coin is not transparent.Risk modeling firm Gauntlet found that months after the token’s launch, crypto wallets tied to the issuance held nearly 17 million tokens, with a further 17 million being transferred to crypto exchanges.In July this year, another 90 million tokens were unlocked and circulated.The Bloomberg Billionaires Index counts 40% of the memecoin’s total in the Trump family’s wealth, based on the family’s holdings in World Liberty Financial.
At current prices, the tokens are worth about $310 million, down about $117 million from the end of August.
But the Trump family’s token holdings have increased significantly, according to calculations by the index.Some tokens held by insiders and issuers were previously locked and will be gradually unlocked over three years.
Data from encryption research company Messari shows that after the unlocking incident in July, insiders unlocked nearly 90 million Trump memecoins, of which the Bloomberg Wealth Index attributed approximately 40% to the Trump family.
These newly unlocked tokens are worth approximately $220 million, representing an increase in the total value of the family’s holdings.It is unclear whether the Trump family has sold the token since July.
