PoliFi Tokens and the Trump Effect

TL;DR

The paper investigates PoliFi tokens TRUMP and MELANIA to determine whether political signals, as reflected in presidential approval, influence token prices and market activity. Using a longitudinal approach that combines on-chain market data, off-chain political signals, and a forward-backward change-point detection framework, the study finds a Trump Effect: the tokens' prices rise with approval while their returns often exhibit mean-reverting, negative associations, a pattern not quite mirrored in broader crypto markets. The analysis also documents ecosystemic spillovers, notably a surge in Solana activity and market share following the token launch, suggesting capital reallocation within DeFi ecosystems tied to political branding. The work is preliminary (≈10 months of data) but highlights a measurable link between political perception and cryptoasset dynamics, motivating ongoing data collection and refinement.

Abstract

Cryptoassets launched by political figures, e.g., political finance (PoliFi) tokens, have recently attracted attention. Chief among them are the eponymous tokens backed by the 47th president and first lady of the United States, TRUMPandMELANIA. We empirically analyze both, and study their impact on the broad decentralized finance (DeFi) ecosystem. Via a comparative longitudinal study, we uncover a "Trump Effect": the behavior of these tokens correlates positively with presidential approval ratings, whereas the same tight coupling does not extend to other cryptoassets and administrations. We additionally quantify the ecosystemic impact, finding that the fervor surrounding the two assets was accompanied by capital flows towards associated platforms like the Solana blockchain, which also enjoyed record volumes and fee expenditure.

Figures (5)

• Figure 1: Some of the notable events covered in our study.
• Figure 2: The Spearman correlation between approval ratings and log-returns (left), and between ratings and prices (right).
• Figure 3: Across the board, log-prices correlate well with approval ratings greater than $46\%$. The hyper=false]trump and hyper=false]melania political memecoins stand out in continuing this correlation for lower ratings (left figure), while other tokens (e.g., $BTC, center figure) and memecoins (e.g., $DOGE, right figure) exhibit an opposite correlation.
• Figure 4: Solana's share of all spikes to a record 9.61% (left figure), and both its daily fees and trading volume surge to their all-time highs shortly after the hyper=false]trump launch on Jan. 17 (right figure).
• Figure 5: hyper=false]trump's price follows approval, with the notable exception of a 3-week period starting with "liberation day". Other notable tokens do not exhibit this behavior.