Bitcoin News Today: Bitcoin's Crash Reflects Trump's Waning Power, as Crypto Ties Unravel with MAGA Decline

The Bitcoin crash has become a barometer for the unraveling of what Nobel laureate Paul Krugman calls the "Trump trade," as the cryptocurrency's collapse coincides with eroding political influence for Donald Trump and his family's crypto-linked fortunes. Krugman, in a recent Substack post, framed the $1 trillion selloff in digital assets as a reflection of waning confidence in Trumpism, arguing that the crypto market's plunge mirrors the 's diminishing grip on both the Republican Party and the economic policies he championed according to Krugman.

The Trump family's exposure to crypto has left them particularly vulnerable to the downturn. Their wealth, which peaked at $7.7 billion in early September, has since fallen to $6.7 billion, according to the Bloomberg Billionaires Index, with losses concentrated in volatile crypto assets. Eric Trump's stake in American Bitcoin Corp. (ABTC) has shed over half its peak value, while the Trump-branded memecoin-launched during the presidential inauguration-has lost roughly 90% of its value since its high in January. Shares of Trump Media & Technology Group, which had aggressively hoarded Bitcoin and other tokens, have also hit record lows according to reports.

Despite the losses, the Trumps maintain a buffer through complex financial structures. For example, their flagship crypto project, World Liberty Financial, has seen its WLFI token lose nearly half its value, but the family retains revenue from token sales and a stake in Alt5 Sigma, a publicly traded company that bought WLFI tokens at a discount. "The Trumps can not only speculate, but they can create tokens, sell them, and make money off those transactions," noted Georgetown University finance professor Jim Angel, highlighting the asymmetry between retail investors and the Trumps' crypto empire.

Eric Trump has remained defiant, touting Bitcoin as "the greatest asset of our time" during a Yahoo Finance event, even as American Bitcoin's shares dropped 30% since their Nasdaq debut in September. The company, which mines Bitcoin at half the market price in West Texas, reported a $3.5 million Q3 profit, though its market valuation of $4 billion remains precarious. Meanwhile, the Trump family's memecoin holdings have grown in value due to token vesting schedules, even as their paper losses mount.

Krugman's analysis ties the crypto crash to broader political trends. Trump's approval ratings have dipped to 38%, the lowest of his second term, as bipartisan support for policies like releasing the Jeffrey Epstein files and rolling back Trump-era tariffs signals a fracturing of the MAGA base. The Nobel laureate argues that the weakening of Trump's influence has directly impacted the crypto sector, which once thrived under his pro-crypto policies, including pardoning Binance founder Changpeng Zhao and advocating for Bitcoin ETFs. "A weakened Trump is less able to work his will on all fronts, including his efforts to promote crypto," Krugman wrote.

The broader crypto market's turmoil has also exposed vulnerabilities in Trump's economic agenda. Treasury Secretary Scott Bessent attributed inflation to the services sector, not tariffs-a stance aligning with Trump's policies-while dismissing recession risks despite a 43-day government shutdown inflicting $11 billion in economic damage. Yet, as Bitcoin's price tumbles from a $126,000 peak to around $87,000, the administration's pro-crypto measures have failed to stabilize the market, further eroding trust in Trump's economic stewardship.

As the Trump family navigates its crypto losses, the political implications are clear: a market once buoyed by Trump's endorsements is now a casualty of his declining power. Whether this signals a broader shift in the GOP's alignment or merely a cyclical crypto downturn remains uncertain, but Krugman's diagnosis of the "unraveling of the Trump trade" underscores a pivotal moment in both financial and political landscapes.