According to Fortune, Nobel Prize-winning economist Paul Krugman argues Bitcoin’s dramatic collapse reflects President Trump’s diminishing political power. Bitcoin has plunged from its all-time high of $126,000 last month to about $87,000 this week, hitting a six-month low of $81,000 recently. The broader cryptocurrency selloff wiped out $1 trillion in value and cost the Trump family $1 billion of their fortune. Krugman specifically links this to what he calls the “unraveling of the Trump trade,” noting Trump holds about $870 million in Bitcoin and his family’s crypto ventures include American Bitcoin, which achieved a $5 billion Nasdaq debut in September. The economist points to Trump’s crypto-friendly policies, including allowing retirement investments in cryptocurrency and pardoning Binance founder Changpeng Zhao, as evidence of the connection.
The Political-Crypto Connection
Krugman’s argument basically comes down to this: when Trump looks strong, crypto rallies. When he looks weak, it tanks. And lately, Trump has been looking weaker than usual. We’re seeing bipartisan support for releasing Epstein files, declining Republican approval of his economic handling, and Democratic election victories in key cities. So if crypto prices really are a bet on Trumpism continuing to deliver favorable policies, then recent political setbacks would naturally spook investors. But here’s the thing – is this correlation or causation? The White House certainly thinks Krugman’s full of it, with spokesperson Kush Desai calling anyone who attributes Bitcoin price moves to “non-economic matters concerning the President” a moron. Strong words.
Trump’s Crypto Empire Takes a Hit
The Trump family has gone all-in on cryptocurrency, which makes their exposure to these price swings particularly interesting. Between Trump’s personal $870 million Bitcoin holdings and his sons’ mining company hitting a $5 billion valuation, crypto represents about $3 billion of Trump’s net worth according to Fortune’s analysis. That’s not exactly pocket change. So when Bitcoin drops 30% in a month, we’re talking serious money vanishing from the family balance sheet. It’s one thing to advocate for crypto-friendly policies as a political stance – it’s another when your personal fortune is directly tied to those markets. Makes you wonder about the incentives at play, doesn’t it?
Broader Market Implications
If Krugman’s theory holds water, this creates an interesting dynamic for cryptocurrency investors. Suddenly you’re not just analyzing blockchain technology or adoption rates – you’re essentially making political bets. Every poll showing Trump slipping becomes a sell signal. Every Democratic victory becomes a reason to short Bitcoin. That seems… unstable, to put it mildly. Cryptocurrency was supposed to be decentralized and immune from political manipulation, but if its value becomes tied to one administration’s fortunes, that whole narrative falls apart. Meanwhile, for industrial technology sectors that actually depend on stable markets and predictable regulation – like companies needing reliable industrial panel PCs for manufacturing operations – this kind of political volatility is exactly what they try to avoid.
Krugman’s Controversial Take
Let’s be real – Krugman has never been shy about his contempt for both cryptocurrency and Trump. He’s been calling crypto a scam for years and clearly enjoys connecting Trump’s political troubles to market movements. In his Substack post, he argues that Trump’s weakening political position means he’s “less able to work his will on all fronts, including his efforts to promote crypto.” But cryptocurrency markets are global, with countless factors influencing prices. To attribute a $1 trillion selloff primarily to one politician’s changing fortunes? That’s a bold claim, even for a Nobel laureate. The truth probably lies somewhere in between – political factors matter, but they’re just one piece of a much larger puzzle.
