Crypto Trump Trade Crashing As Bitcoin Down, He Loses $1 Billion In Market Rout

If you bought $100,000 of Trump memecoins or other family-related crypto assets, you have $9,000 left. And Bitcoin, to which the Trump crypto is tied, is down 25% in the last month. 

Crypto has always been speculative, but given its history of use for tax evasion and frequently illegal activity, it held an obvious attraction for those who view bribery as an opportunity. The problem is that the crypto 'industry' such as it is, has become a bet on Trumpism which, after a year, is no longer the sure thing it once appeared to be, due to a series of self-inflicted economic and social policies gone bad. JL

Paul Krugman reports in his substack and Andrew Folkier reports in Crypto News:

Crypto has fallen a lot. Bitcoin is down 25% since late October. The Trump family’s wealth has declined more than $1 billion over the past month, affected by Trump’s memecoin, Eric Trump’s Bitcoin mining firm, and Truth Social, all of which are tied to Bitcoin. To the extent that crypto has a use, it is covering financial tracks: crypto facilitates anonymous transactions and facilitates predatory behavior. Such transactions aren’t necessarily criminal, but...So, it’s possible Bitcoin will bounce back, because it’s a cult. But maybe not, because at this point Bitcoin is a Trump trade. Trump, whose family has received massive bribes from the crypto industry, has rewarded that investment with pro-crypto policies. Bitcoin’s price surged after Trump won last year, and its recent plunge coincides with Trump political setbacks. Trump’s power is visibly diminishing, so the price of Bitcoin, which has become a bet on Trumpism, has plunged.

What is Bitcoin good for? It isn’t money — that is, it isn’t a medium of exchange, something you can use to make payments. It isn’t a hedge against inflation. It isn’t a hedge against financial risks — on the contrary, the price of Bitcoin has generally moved in the same direction as the AI-related stocks driving the stock market these days, but with even greater volatility.

 

The Trump family’s reported wealth has declined by more than $1 billion over the past month due to losses in cryptocurrency holdings. The family’s crypto assets have been affected by recent market conditions, including President Trump’s official memecoin, Eric Trump’s Bitcoin mining firm American Bitcoin, and Truth Social, all of which are tied to Bitcoin, according to the report. Trump family crypto holdings suffer heavy loses in latest market rout Trump Media & Technology Group, the parent company of Truth Social, has experienced significant losses. The firm’s shares fell to a record low, reducing the value of Trump’s stake since September, Bloomberg reported. The company invested heavily in Bitcoin BTC1.01%Bitcoin, purchasing a large stockpile at higher prices that has since declined in value.

 

World Liberty Financial, described as the family’s principal crypto operation, has also seen its token valuation decrease from previous highs. A spokesperson for World Liberty Financial  WLFI7.5%World Liberty Financial stated that “Crypto is here to stay” and emphasized long-term conviction in technologies supporting digital assets, suggesting these innovations could transform financial services. Following President Trump‘s return to office in January, his sons Eric Trump and Donald Trump Jr. began collaborating with Hut 8 Corp, a crypto company that supplies Bitcoin mining equipment. In exchange, they secured a controlling interest in a newly formed organization called American Bitcoin Corp, according to reports. Eric Trump holds approximately a 7.5% stake in the venture. Shares of Hut 8, traded on Nasdaq, have fallen sharply, reducing Eric Trump’s wealth since September, the report stated. Eric Trump stated that the recent market declines may present “a great buying opportunity,” according to public statements. He suggested that those who purchase during downturns and embrace market volatility are likely to be long-term winners in the cryptocurrency landscape. To the extent that Bitcoin has a use case, it is covering your financial tracks: crypto facilitates anonymous transactions that don’t leave a paper trail. Such transactions aren’t necessarily criminal, but many are. By the way, anonymity doesn’t just enable crime by crypto users, it also enables crime against them. If you possess a Bitcoin’s key, the code that unlocks it, it’s yours, no matter who you are and how you got it. In that sense, getting your hands on a Bitcoin key is similar to getting your hands on a bag full of $100 bills. This feature has led to a wave of abductions of major crypto investors by criminals demanding their keys. Indeed, such abductions have become so common that a major recent Bitcoin conference included a daylong “counter-kidnapping” workshop, in which participants learned, among other things, how to gnaw their way through zipties. In addition to facilitating crime, Bitcoin has increasingly become an engine of predation. Crypto — or, worse, shares in companies that buy crypto with borrowed money — is heavily sold to naïve investors who don’t realize what they’re getting into. They do well when Bitcoin’s price is rising, but many probably don’t understand how badly they can suffer when it falls. And crypto has fallen a lot recently. Bitcoin has actually held up better than smaller, more obscure coins, but even so it’s down roughly 25 percent since late October. It’s possible that Bitcoin will bounce back, because it’s more than an asset, it’s a cult. When I spoke with Hasan Minhaj and Bitcoin came up, his immediate reaction to my criticism was “I don’t want to get memed, the Bitcoin boys have already come after me.” This cult status has allowed Bitcoin to recover from setbacks and scandals that would have sunk any normal investment, because true believers respond to any drop in its price by piling in more than ever. And maybe that will happen again. But maybe not, because at this point Bitcoin is largely a Trump trade. Bitcoin’s price surged after Donald Trump won last year, and its recent plunge coincides with a series of Trump political setbacks. Why is Bitcoin a Trump trade? Partly because Trump, whose family has in effect received massive bribes from the crypto industry, has been rewarding that investment with pro-crypto policies. Notably, Trump has signed an executive order intended to allow ordinary Americans — who, again, generally don’t know what they’re getting into — to invest money from their 401(k)s in crypto assets. More broadly, crypto is, as I’ve suggested, increasingly a tool for financial predators, and the Trump administration is extremely predator-friendly. Ask Changpeng Zhao, founder of the cryptocurrency exchange Binance, who was found guilty of violating U.S. money-laundering laws — then pardoned by Trump. The administration has been doing all it can to dismantle institutions, like the Consumer Financial Protection Bureau, that were created to help keep investors and markets safe after the 2008 financial crisis. Scott Bessent, the Treasury secretary, and other Trump officials and allies — including some officials at the Federal Reserve — have also been doing all they can to undermine bank supervision, which tries to limit the kind of risk-taking that brought on the 2008 crisis. All of this is bad for small investors and bad for financial stability. But it’s good for financial schemers like the people and institutions promoting Bitcoin. So how should we understand Bitcoin’s recent crash? Think of it as the unraveling of the Trump trade. Trump remains as determined as ever to reward the industry that made his family rich, and those around him are as determined as ever to make America safe for predators of all kinds. But Trump’s power is visibly diminishing, so the price of Bitcoin, which has in effect become a bet on Trumpism, has plunged. Why is Trump suddenly looking weaker? Polls have given him very low marks since the spring, but his net approval has declined significantly over the past month. And while Trump just claimed that he has THE HIGHEST POLL NUMBERS OF MY “POLITICAL CAREER” — nobody knows what poll, if any, he’s referring to — most doubts about the validity of polls showing his extreme unpopularity were dispelled by blowout Democratic victories in Virginia and New Jersey on Nov. 4. These electoral defeats have shaken the willingness of Republicans in Congress to keep showing lockstep obedience to Trump. At the same time, the growing furor over Trump’s ties to Jeffrey Epstein has rattled the MAGA base. Many political analysts, I suspect, don’t fully appreciate the extent to which many members of that base truly believed that Trump was protecting the world against Democratic pedophiles, and the degree to which they have been shaken by the growing realization that they may have gotten their heroes and villains mixed up. Is it a stretch to link Trump’s political woes to the price of crypto? No. As Josh Marshall often emphasizes, power is unitary. A weakened Trump is less able to work his will on all fronts, including his efforts to promote crypto. I’ll talk more about the politics/crypto linkage in future posts. For now, let me just reiterate that Bitcoin has become a Trump trade, and Bitcoin’s declining price is an indicator of Trump’s declining dominance over the G.O.P..