Nobel Prize-winning economist Paul Krugman argued that the recent crash in bitcoin is directly tied to a weakening of President Donald Trump's political clout. He stressed, "You can view it as the collapse of the 'Trump trade' (a bet on Trumpism)."
According to Fortune on the 26th (local time), bitcoin plunged within a month after hitting an all-time high of $126,000 last month and now hovers around $87,000. Last week it fell to a six-month low of $81,000. It soon recovered the $90,000 level, but the plunge triggered $1 trillion in market cap selling, and the Trump family, which has continued to invest heavily in bitcoin, is said to have suffered about $1 billion in asset losses.
Krugman has taken a critical stance toward Trump and the broader cryptocurrency industry since his days as a New York Times columnist. In his recent Substack newsletter, he noted, "Trump is deeply entangled with the interests of the cryptocurrency industry and is strongly inclined to repay the favor in this area." Trump is reportedly holding $870 million worth of bitcoin, and American Bitcoin, a mining company involving his sons, listed on Nasdaq in September with a $5 billion valuation.
Krugman also viewed the Trump administration's policies as having bolstered crypto strength. Trump proposed a plan for a U.S. government bitcoin reserve and signed an executive order allowing Americans' retirement funds to be invested in cryptocurrencies. Last month he also pardoned Binance founder Changpeng Zhao, who had pleaded guilty to violating anti-money laundering laws.
However, he interpreted recent market moves as a weakening of political halo. He said Trump's political base is shaking as support for Trump's policies declines within the Republican Party and as Democratic and socialist-leaning candidates win one after another in key city elections such as New York and Seattle. Krugman analyzed, "As Trump's power wanes, bitcoin, which was effectively seen as an investment in Trumpism, has lost momentum." Emphasizing that the crypto market has been closely linked to political power, he said, "A weakened Trump will lack the clout to push crypto policy."
Krugman defined the bitcoin plunge not as a simple asset price fluctuation but as a trend reflecting the weakening of Trump's political power. Citing past cases in which bitcoin prices surged in response to various policy announcements or deregulatory signals from the Trump administration, he said, "The crypto market is bound to wobble the moment the political halo fades."
This view is spreading in the market as well. Some experts analyzed that in recent years bitcoin has been perceived as a "pro-Trump asset." As the Trump family directly participated in the bitcoin ecosystem, price volatility became excessively linked to political events, and, in fact, prices repeatedly plunged or rebounded whenever there were tariff reviews or policy announcements. Experts said, "With political risk elevated, it is difficult to expect bitcoin to serve as a safe asset," and predicted, "Future changes in the U.S. political landscape will act as a key variable in price trends."
On this, White House Spokesperson Kush Desai pushed back on Krugman's interpretation, saying, "It's a preposterous claim to link bitcoin price fluctuations to the president's non-economic issues." The spokesperson said, "The Trump administration is consistently pushing policies for the development of cryptocurrencies."