Javier Milei, 'Hawk Tuah' Girl, and the Twilight of the Meme-Coin Craze
Dear subscriber,
This week, Argentine President Javier Milei has come under fire, with opposition politicians going so far as to call for his impeachment.
It's not because he slashed the value of the peso... or cut the number of government ministries in Argentina in half.
It's because he allegedly endorsed a meme coin.
Now, this isn't the first time we've seen this kind of news. And cryptos are going through a bit of a "crisis of legitimacy" because of that. But as I'll explain today, while this may be the crypto present... I'm still very bullish about the crypto future.
We'll get into why. But first, back to Argentina...
The fiercely libertarian Milei was elected in 2023 with a clear mandate from voters to make big changes. And he came in with an agenda that makes the Department of Government Efficiency ("DOGE") look like a bunch of sleepy bureaucrats.
As the BBC wrote about a year ago, "There is one thing that unites those who love and loathe Argentina's new president – they both describe him as 'crazy.'"
The jury is still out on whether his free-market focus will ultimately bear fruit for Argentina. But he has enjoyed high approval ratings... until recently.
Last Friday evening, he posted on social platform X about a new crypto meme coin called Libra that ostensibly was "encouraging economic growth by funding small businesses and startups." He said that the project will be used to boost Argentina's economy.
The coin's market cap soared to $4 billion following the tweet... and then crashed after speculation that it was all a scam. Milei deleted his post.
Research firm Nansen says that 86% of Libra traders ended up taking a loss.
Milei has at least some room to claim innocence. There's no proof that he has a connection to the coin (yet). He claims to have just been promoting an entrepreneurial effort from Argentine citizens. A government investigation will find out if there's more to it.
Whether you consider Milei's action an endorsement or not, it does follow the typical pattern of the meme-coin craze...
People with some level of fame and trust use their influence to bring attention – and money – to certain coins... without delivering much of value.
In some cases, a celebrity creates a meme coin, granting a large portion of the supply to themselves. They promote it via social media, and their fans drive up the price with their buying. Then the celebrity dumps their supply on to the market to cash out, leaving investors with worthless coins. (This is known as a "rug pull.")
For a time, meme-coin shills got to "pump and dump" with impunity.
Former Olympian Caitlyn Jenner had an early foray, as did musicians like Jason Derulo, Rich the Kid, Lil Pump, Cardi B, Waka Flocka Flame, Sean Kingston, and Iggy Azalea.
President Donald Trump emerged largely unscathed from his decentralized-finance protocol World Liberty Financial and his $TRUMP meme coin.
But the trend started to fall apart, even before Milei, with the first high-profile fall from grace striking "Hawk Tuah" girl.
That's the nom-de-Internet for flash-famous influencer Haliey Welch.
Welch went viral for some off-color, off-the-cuff comments in a man-on-the-street YouTube video. (I won't go into the details.)
And she quite expertly parlayed that viral video into 15 minutes of fame, which includes 2.6 million Instagram followers (currently), her own merchandise line, and a podcast that briefly became the third-most popular on Spotify.
Our society doesn't seem to mind the monetization of fame like it once did.
But Welch went too far when she helped promote the $HAWK meme coin. It surged to a market cap of $491 million upon launch and then plummeted more than 90% the same day. Now, its market cap sits at about $11 million.
Fans who suffered losses turned on her online. And lawyers got involved. Welch has basically gone into the Internet version of hiding and is "fully cooperating" with attorneys.
Between Milei and Welch, the meme-coin glory days are fading. These rug pulls are getting much more media attention now that more crypto investors are wise to the scheme... and less willing to get left holding the bag.
And the more famous these entrepreneurs and celebrities are, the more serious the social and legal repercussions seem to be getting.
To put it plainly, meme coins run on "vibes" – they aren't supported by the same sort of data we enjoy in traditional financial markets.
And two meme-coin indexes suggest that the fervor is on the wane. The first, the Truflation Meme Coin Index, tracks the eight highest-performing meme coins...
The second, the MarketVector Meme Coin Index, is a market-cap-weighted index that tracks the six largest meme coins...
I'm not here to tell you to give up on cryptocurrencies. Far from it.
I can't stand meme coins, but I am bullish on crypto.
There are real, useful technologies being built in the crypto universe that can turn into real businesses... and there are tokens with real economics.
It's just that the regulatory environment has made it easier to be a junky meme coin than an actual crypto business. As I explained in November after Trump's election win...
It all depends on what counts as a "security"...
To be considered a security, an asset has to meet four criteria: 1) It is an investment of money, 2) it comes with an expectation of profits, 3) it's part of a common enterprise, and 4) it relies on the efforts of a promoter or third party to make money. (This is known as the Howey Test.)
If the U.S. Securities and Exchange Commission ("SEC") considers your token a security, you have to register it as a security, follow lots of rules, and take on lots of extra costs.
The SEC has declared that bitcoin and Ethereum aren't securities. They're closer to currencies, since no one is building them up as businesses.
Meme coins fall into the same category. Dogecoin is just a joke based on a dog. No one is promising profits based on a common enterprise, so meme coins don't get regulated as securities.
But if you're building a real business on the blockchain... well, that's a security. So you need to register.
Unfortunately, when these kinds of businesses have taken the high road and tried to register as a security, the SEC has made it nearly impossible.
For instance, the largest crypto exchange in the U.S., Coinbase Global (COIN), has spent the past several years practically begging for a way to register itself as an exchange with the SEC. It has even offered to follow any rules the SEC wants.
Instead, the SEC charged Coinbase with operating as an unlicensed securities exchange.
In response to the allegation, Coinbase explained that it had undertaken "exhaustive and fruitless attempts – dozens of meetings and hundreds of hours of communications – to register a securities trading platform with the Commission since at least 2018."
The SEC just won't let it.
A good regulatory agency would squash the meme-coin scams and provide a path to legitimacy for the legitimate. And I expected Trump's administration would put those moves in place.
So far, we haven't seen the framework for crypto projects to proceed. And that's okay. It's early.
Today, meme-coin pump-and-dumps look like they'll be policed by social shame and civil lawsuits, rather than regulators. That works just as well.
The future is still bright for thoughtful, fundamental crypto investors (with proper risk management, of course).
My bullish expectations for crypto haven't changed since November... even if they've roped in a few characters I wouldn't have had on my meme-coin bingo card.
What Our Experts Are Reading and Sharing...
Earlier this week, Elon Musk's xAI released Grok 3, the latest version of its AI model. The reactions are weirdly divergent. It scores well on all the benchmarks, putting it in line with other state-of-the-art models. But while some people are raving about it, others are trashing it. It may be more of a reflection on how divisive Musk has become, rather than a fair assessment of the technology. Zvi Mowshowitz, who provides very in-depth AI updates on his Substack, may sum it up best: "Grok 3 is out. It mostly seems like no one cares."
In other Musk news, DOGE announced that it saved $8 billion by canceling a contract for the Immigration and Customs Enforcement agency. However, that math didn't add up... considering the agency's total annual budget is around the same amount. The New York Times recently wrote that, upon further inspection, it appears that $8 billion contract was actually for $8 million. That cuts DOGE's savings by roughly 50%. As the Associated Press writes, that won't make up much ground against the budget proposed by House Republications, which cuts $1.5 trillion in spending... but also includes $4.5 trillion in tax cuts. We're moving in the wrong direction.
If for some reason you want more Musk news, our extremely intelligent friends at our corporate affiliate Altimetry just launched a new, free show called Altimetry: Off Ledger today. Altimetry's Chief Investment Officer Joel Litman, who regularly briefs the Department of Defense on economic trends, sits down with Director of Research Rob Spivey. They talk about Musk's recent moves in military spending... and they cover a lot of non-Musk things as well, like global inflation and Amazon's (AMZN) latest earnings. You can watch it here on YouTube.
New Research in The Stansberry Investor Suite...
While meme coins are making headlines today, they're just a sideshow.
There are big things happening in crypto, particularly with the blockchain – one of the most influential innovations of our time.
The blockchain enhances transparency in markets. It gives you full control over your money. It improves efficiency and profitability. It simplifies transactions. And it provides unmatched security, making your accounts nearly impossible to hack when you practice basic online safety.
That has been overshadowed by silly stuff lately. But it's very real.
Our in-house crypto expert Eric Wade is the only man I trust on this topic. He doesn't mess around with meme coins or pump-and-dump schemes. You won't find him shilling the latest token on TikTok.
I like to think of him as the Warren Buffett of crypto... searching for real, useful innovations that will deliver legitimate returns to smart crypto investors.
That may mean he misses out on insane gains in things like Fartcoin... But importantly, it also means he doesn't take insane risks.
This month in the Stansberry Innovations Report, Eric and his team unearth a blockchain-powered solution that could completely change how Internet applications work.
One company is building a decentralized "world computer" that lets developers and communities keep full control over their applications, no matter where they're located. That means fewer cases of outages, censorship, and other restrictions.
Now, longtime Innovations Report subscribers know that Eric is always early to these opportunities... And few investors are talking about this token right now. If it takes off, it could surpass Ethereum... the second-biggest crypto behind bitcoin.
Stansberry Investor Suite subscribers can read the entire report here.
If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.
Until next week,
Matt Weinschenk
Director of Research
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