The
Bitcoin
crash has become a key indicator of what Nobel Prize winner Paul Krugman refers to as the collapse of the "Trump trade." The sharp decline in cryptocurrency values has paralleled a decrease in Donald Trump’s political clout and the fortunes of his family, which are tied to crypto. In a recent Substack article, Krugman described the $1 trillion drop in digital assets as a sign of fading faith in Trumpism, suggesting that the crypto market’s steep fall reflects Trump’s loosening hold over the Republican Party and the economic strategies he once promoted
according to Krugman
.
The Trump family's involvement in crypto has made them especially susceptible to the downturn. Their net worth, which
reached $7.7 billion
at its highest in early September, has dropped to $6.7 billion, Bloomberg Billionaires Index reports, with most losses stemming from unstable crypto holdings. Eric Trump’s investment in
American Bitcoin
Corp. (ABTC) has lost more than half its value since its peak, and the Trump-branded memecoin—launched at the presidential inauguration—has plummeted by about 90% since its January high. Shares of
Trump Media
& Technology Group, which had amassed large amounts of Bitcoin and other cryptocurrencies, have also fallen to historic lows
according to reports
.
Despite these setbacks, the Trump family still has a cushion thanks to intricate financial arrangements. For instance, their main crypto venture,
World Liberty Financial
, has seen its
WLFI
token lose close to 50% of its value, but the family continues to earn from token sales and holds a stake in Alt5 Sigma, a public company that acquired WLFI tokens at a reduced price. "The Trumps not only invest in tokens, but also create and sell them, profiting from these deals,"
explained Georgetown University finance professor Jim Angel
, pointing out the difference between regular investors and the Trump family's crypto operations.
Eric Trump has remained optimistic, calling Bitcoin "the greatest asset of our time" at a Yahoo Finance event, even as American Bitcoin’s stock has fallen 30% since its Nasdaq launch in September. The company, which mines Bitcoin in West Texas at half the average market cost,
posted a $3.5 million profit for Q3
, though its $4 billion market cap is still unstable. At the same time, the Trump family’s
memecoin
assets have increased in value due to token vesting, despite mounting paper losses.
Krugman’s commentary connects the crypto downturn to larger political shifts. Trump’s approval rating has
fallen to 38%
, the lowest in his second term, as bipartisan moves like releasing the Jeffrey Epstein files and reversing Trump-era tariffs show cracks in the MAGA coalition. The Nobel laureate contends that Trump’s weakening influence has had a direct impact on the crypto industry, which once flourished under his supportive stance, including pardoning Binance founder Changpeng Zhao and backing Bitcoin ETFs. "With Trump’s power diminished, his ability to push crypto forward is also reduced,"
Krugman wrote
.
The recent chaos in the crypto sector has also highlighted weaknesses in Trump’s economic policies. Treasury Secretary Scott Bessent
blamed inflation on the services industry
, not tariffs—a view consistent with Trump’s approach—while downplaying the threat of recession, even after a 43-day government shutdown caused $11 billion in economic losses. Still, as Bitcoin’s value has dropped from a high of $126,000 to about $87,000, the administration’s crypto-friendly policies have not been able to steady the market,
further undermining confidence in Trump’s economic leadership
.
As the Trump family deals with their crypto setbacks, the political consequences are evident: a market once lifted by Trump’s backing is now suffering from his waning influence. Whether this marks a deeper change in the GOP or is simply part of the crypto cycle is unclear, but Krugman’s assessment of the "Trump trade" coming undone highlights a crucial turning point in both the financial and political arenas.