Traders are losing a lot of money as the memecoin market takes a downturn. One trader, who put over $1 million into memecoins, saw nearly 90% of their investment vanish in just two days. This drop happened because the value of these hype-driven tokens plummeted.

The recent excitement around memecoins began when former President Donald Trump entered the cryptocurrency scene. On January 24, the blockchain analytics firm Lookonchain revealed that this trader withdrew more than $1 million in Solana (SOL) tokens to invest in memecoins. Unfortunately, they lost almost all of it. They spread their investment across 13 different memecoins and ended up losing about $900,000. Out of those 13, only one made a profit of $231. The biggest losses came from Alon (ALON), costing them over $400,000, and Vinecoin (VINE), which set them back more than $200,000.

On January 18, President Trump launched an official memecoin project. This sparked a trading frenzy, pushing the memecoin's market cap to nearly $9 billion within hours. First Lady Melania Trump also introduced her own meme token, which initially performed well.

While some traders made money from the TRUMP token, others were not so fortunate. As of the latest updates, the TRUMP token was trading around $34, down 53% from its peak on January 19. Meanwhile, the MELANIA token dropped to about $2, nearly 80% lower than its high of $13 on January 20.

As the TRUMP token's value fell, traders who bought in at higher prices saw their investments shrink. On January 21, Lookonchain pointed out that a wallet linked to crypto influencer Ansem lost over $2.5 million on the TRUMP token. This wallet spent 9.3 million USD Coin (USDC) to buy TRUMP tokens at $48, but sold them for only $35, leaving them with $6.8 million.

Many other traders also reported losses. One user claimed that a trader lost $20 million on the TRUMP token, while another mentioned a loss of $400,000 on the MELANIA token.

The rise of Trump-related memecoins has drawn criticism and calls for investigations. Some see these tokens as a sign of growing acceptance of cryptocurrency, but others warn about the risks they pose to investors. Scam investigator Coffeezilla noted that many people losing money on these tokens aren’t experienced in crypto.

On January 21, Democratic lawmaker Gerald Connolly from Virginia asked the US House Committee on Oversight and Government Reform to look into whether Trump’s crypto projects conflict with his official duties. A day later, Senator Elizabeth Warren urged US financial regulators and the ethics office to examine the ethical and legal issues surrounding the crypto tokens associated with the president and the First Lady.