Bitcoin crash explained: Expert sees connection to Trump’s political influence
Nobel Prize winner and economist Paul Krugman comments on the Bitcoin crash: Trump’s declining power is to blame.
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• Expert sees Bitcoin crash as a consequence of the end of the “Trump trade”.
• Trump’s political weakness affects the crypto market
• Bitcoin is increasingly seen as a bet on “Trumpism”.
The recent slump in the crypto market made headlines around the world. Bitcoin in particular has recently been in a historic correction phase. The cryptocurrency even hit a multi-month low in recent weeks. For Nobel Prize winner Paul Krugman, however, this crash is more than just a market shakeout. Because it points to a political power vacuum.
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Expert explains: The Bitcoin crash has unraveled the “Trump trade”.
In a post on Substack on November 24, 2025, the economist explained that the price decline is closely linked to the waning political strength of President Donald Trump. “How should we understand Bitcoin’s recent crash? Think of it as the unraveling of the Trump trade,” Krugman said. “Trump is 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,” he added. For years, Trump has not only maintained a positive attitude towards the crypto industry, but also holds significant amounts of Bitcoin himself. According to Fortune, Trump’s personal holdings are around $870 million, while his family’s crypto activities are estimated to be worth several billion.
In particular, the billion-dollar sell-off on the crypto market – a total of around $1 trillion – even cost the Trump family around $1 billion of their assets, according to Bloomberg.
Political weakness as a market signal?
Krugman argues that Bitcoin has increasingly acted as a bet on Trumpism in recent years. Among other things, the president supported the idea of a government Bitcoin reserve and signed an executive order allowing US pension money to be invested in cryptocurrencies. He also pardoned Binance founder Changpeng Zhao, who was found guilty of violating US money laundering laws in 2023.
“But Trump’s power is visibly diminishing, so the price of Bitcoin, which has become a de facto bet on Trumpism, has collapsed,” Krugman added in his Substack post. He sees evidence of this in the cross-party demand for the publication of the Epstein files, declining Republican approval of Trump’s economic policies and recent Democratic election successes – such as the victories of democratic socialist mayors in New York and Seattle. These developments could weaken confidence in Trump’s ability to continue actively promoting the crypto industry.
“A weakened Trump is less able to impose his will on all fronts, including his efforts to promote crypto,” Krugman writes, citing journalistic analysis by Josh Marshall, who describes power as “unitarian.” Weakness in one area radiates to all others.
Trump’s power over Bitcoin: White House clearly disagrees
But there is opposition from government circles. A White House spokesman, Kush Desai, told Fortune that he rejected the idea that Trump’s personal power could have any impact on the price of Bitcoin. “Only an idiot would ignore these guidelines and attribute fluctuations in the price of a privately traded cryptocurrency to non-economic presidential affairs,” Desai told Fortune.
Whether Krugman’s theory of a dissolved “Trump trade” is correct or whether the crypto market is simply going through a typical period of volatility remains an open question. Nevertheless, the political dimension of Bitcoin and Co. is increasingly coming into focus.
Bettina Schneider / editorial team finanzen.net