SOL Stablecoin Supply Hits $10B Driven By TRUMP Token Frenzy

Last Month, entities affiliated with Donald Trump launched  TRUMP, the “official memecoin” of the U.S. President. As soon as this memecoin made its debut, TRUMP experienced a jaw-dropping run-up in price.

At first trading for just 17 cents, this memecoin surged to as much as $75.35 on Jan. 19, according to Binance, just ahead of Trump’s inauguration to a second term as President. Since then, however, TRUMP has experienced a sharp pullback in price.

Although still up considerably from its initial offering price, those who bought in at or near the peak are deep underwater, as TRUMP is now down by more than 78% from its all-time high.

Yet while the speculative frenzy may be over for TRUMP, the impact of this latest episode of “memecoin mania” is having, and could continue to have, a positive impact on another well-known cryptocurrency: Solana (SOL).

Solana: Big Beneficiary of ‘Trumpcoin Mania’

So, why has TRUMP been a boon for Solana? It all has to do with stablecoin supply. For its launch, TRUMP chose the Solana network for its hosting. Recently, an increasing number of memecoins have opted for hosting on Solana over hosting on Ethereum, previously the preferred platform.

In addition to TRUMP’s selection of the Solana network as its host, there was another factor at play driving the TRUMP-related surge in Solana’s stablecoin supply. Before debuting on major centralized exchanges, the TRUMP memecoin was only available for trading on the Meteora decentralized exchange (or DEX).

As TRUMP was paired against USDC on Meteora, this required traders to acquire USDC prior to acquiring the memecoin. With this, Solana’s stablecoin supply, as well as Solana-based DEX trading volumes, took off like a rocket.

Per data compiled by DefiLlama, the amount of stablecoins held on Solana increased more than doubled during January, rising from $5.1 billion on Jan 1, to $11.4 billion by Jan. 31. At the height of “Trumpcoin mania,” daily Solana-based DEX trading volumes climbed to above $25 billion.

SOL’s Short-Lived Surge on This Development

In response to initial reports of Solana’s TRUMP-driven increase in stablecoin supply, SOL, Solana’s native token, began to experience a run-up in price, albeit a more moderate rally compared to the TRUMP super-rally.

Trading for under $200 per token before “Trumpcoin mania,” SOL traded for as much as $294.33 per token on Jan. 19, the same day TRUMP peaked in price. Unfortunately, much like what happened with TRUMP memecoin prices in the days following the inauguration, SOL quickly started coughing back its gains as well.

As of this writing, Solana’s native token has made a full trip back down to prior price levels. Still, even as subsequent price action suggests that market bullishness about this news has come and gone, only time will tell whether that’s truly the case.

Furthermore, new near-term catalysts may be emerging for SOL. For instance, based on recent headlines, we could soon see several financial institutions launch their own Solana exchange traded funds (or ETFs). While not for certain, this could have a positive impact on the price of this popular token.

Bottom Line

In closing, it should also be noted that based on the latest surveying by Binance, bullishness for SOL remains at elevated levels. Out of 535 Binance users surveyed, 46.36% stated that they were “very bullish” on the token.

Moreover, irrespective of whether recent and upcoming catalysts have a positive impact on SOL’s price performance going forward, a longer-term takeaway from this Trump-driven surge in Solana’s stablecoin supply is that this blockchain continues to cement itself as the leading network for memecoins.

While the frenzy for TRUMP has come and gone, in time new memecoins will launch. Assuming that Solana continues to become a leading host for memecoins, in large part due to Solana’s advantages in areas like transaction speed, transaction costs, and scalability, we could see another memecoin launch on its blockchain that also receives a massive influx of capital from speculators and traders.

If this occurs, we could once again see Solana experience another multi-billion dollar jump in its stablecoin supply, not to mention see SOL experience another short-lived surge in price.