Paul Krugman is aiming at the cryptocurrency meltdown, and in his view, the timing isn’t a coincidence. The economist says the digital currency world is falling apart right alongside Donald Trump’s political momentum. According to Krugman, what he calls the “Trump trade” is now “unraveling.”
The Trump family jumped into meme coins and crypto earlier this year, grabbing headlines as they embraced a market known for wild swings. But the gamble appears to have gone sideways. The Daily Beast reported that the Trump family has lost upwards of $1 billion trading cryptocurrency, a staggering hit even for a family with deep financial roots.
Krugman says the collapse isn’t just about market volatility. He argues it lines up closely with Trump’s political troubles, pointing to a pattern that has unfolded since last year. In a Substack post, he wrote, “Bitcoin’s price surged after Donald Trump won last year, and its recent plunge coincides with a series of Trump political setbacks. So how should we understand Bitcoin’s recent crash? Think of it as the unraveling of the Trump trade.”
He says the connection is deeper than most people realize. “Trump remains 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. But Trump’s power is visibly diminishing, so the price of Bitcoin, which has in effect become a bet on Trumpism, has plunged.”
Krugman says the trend becomes even clearer when Trump slips in the polls. When his approval rating drops, cryptocurrencies tied to the Trump family or boosted by the administration appear to fall right along with him. “Is it a stretch to link Trump’s political woes to the price of crypto? No. As Josh Marshall often emphasizes, power is unitary. A weakened Trump is less able to work his will on all fronts, including his efforts to promote crypto.”
A Bloomberg analysis shows the fallout isn’t limited to the crypto charts. The combined wealth of the Trump family reportedly fell from $7.7 billion in early September to $6.7 billion in November. At the same time, Trump’s political footing seems less stable, with a divided GOP resisting him on healthcare and economic issues.
The New Republic has also suggested Trump’s weakening grip could lead to a major shift in next year’s midterms. Analysts note that his age will likely play a role in turnout and voter motivation heading into the 2026 elections.
For now, Krugman’s take is simple: when Trump’s influence shrinks, crypto shrinks with it.