Why Is Bitcoin Down? Paul Krugman Points the Finger at Trump
Bitcoin’s recent price volatility has sparked debates within the cryptocurrency community, and Nobel Prize-winning economist Paul Krugman links this drop to a surprising factor: former President Donald Trump. As Bitcoin faces a nearly 30% decline from its October peak of $126,080, Krugman suggests that Trump’s diminishing influence is playing a significant role in this market downturn.
The “Trump Trade” and Bitcoin’s Rise
Under Trump’s administration, cryptocurrency enjoyed a supportive environment, bolstered by pro-crypto policies and substantial financial backing from the digital asset industry. Bitcoin prices surged after Trump’s election win and subsequent inauguration, thanks largely to a strategic alignment between the former president’s policies and crypto advocates. Trump even launched his own Solana-based token, “Official Trump,” demonstrating his commitment to digital assets.
However, Trump’s controversies and recent decline in approval ratings have shaken investor confidence. As Krugman outlined in his Substack essay titled “The Trump Trade is Unraveling,” the connection between Bitcoin and Trump runs deeper than appearances. “Trump’s power is visibly diminishing, so the price of Bitcoin, which has in effect become a bet on Trumpism, has plunged,” Krugman wrote.
Paul Krugman’s Longstanding Criticism of Bitcoin
Krugman has been a long-time critic of Bitcoin, often questioning its ability to function as a currency or store of value. In his recent essay, he reiterated his stance: “What is Bitcoin good for? It isn’t money—it isn’t a medium of exchange or a hedge against inflation.” He compared Bitcoin to a volatile tech stock, emphasizing its lack of practical applications beyond speculative trading.
Despite the criticism, Bitcoin remains a magnet for traders speculating on its long-term value. Platforms like Coinbase or Binance, where users can easily trade cryptocurrencies, continue to see high traffic as investors monitor market shifts.
Volatility in the Crypto Market
Beyond Trump’s waning influence, the cryptocurrency market has faced additional headwinds in 2025. A trade war led by the U.S. against China caused record-breaking $19 billion liquidations in October, further fueling uncertainty. Bitcoin briefly dropped to a seven-month low of nearly $81,000 but has slightly rebounded to around $90,348 as of the latest reports.
Nonetheless, optimism persists among traders. Prediction markets like Myriad show a 70% likelihood of Bitcoin recovering to $100,000 rather than plummeting to $69,000, reflecting ongoing confidence in the cryptocurrency’s resilience.
What’s Next for Bitcoin?
Krugman’s critiques amplify concerns about Bitcoin’s practicality as more than a speculative asset. While traders hope for a rebound, the polarizing relationship between politics and cryptocurrency continues to shape the market. For those investing in Bitcoin, monitoring political and economic developments is more crucial than ever.
If you’re looking to navigate cryptocurrency’s ups and downs, tools like Ledger Wallet can help securely manage your digital assets. As always, conduct thorough research before making investment decisions and consult with financial experts when needed.
