Nobel laureate Paul Krugman declared the “Trump Trade” dead on arrival this week, arguing that Bitcoin’s retreat from its $126,000 all-time high is a direct casualty of President Trump’s collapsing political capital.
In a blistering Substack post, the economist claimed the crypto market has morphed into a leveraged bet on the administration’s survival. The thesis? As Trump’s second-term agenda stalls amid scandals and election defeats in Virginia and New Jersey, the premium on “MAGA assets” is vanishing.
“Trump’s power is visibly diminishing, so the price of Bitcoin, which has in effect become a bet on Trumpism, has plunged.”
The numbers back the bearish sentiment. Bitcoin has shed nearly 30% from its October peak, triggering a record $19 billion in liquidations in a single day. Read: $90,150 at press time.
Krugman points to specific administration handouts—including the pardon of Binance founder Changpeng Zhao and executive orders pushing crypto into 401(k)s—as evidence that the asset class is artificially buoyed by political patronage rather than fundamentals.
The outlook is grim. With the President’s approval ratings hitting career lows, Krugman suggests the “political halo” protecting the sector is flickering out. The market is now pricing in a lame-duck presidency, and bagholders are paying the tuition.
