Decoding the crypto market crash under Trump leadership

In theory, the crypto market should be booming during the Donald Trump presidency. In reality, the market capitalization of all coins has dropped from $3.6 trillion when he was sworn in to $2.5 trillion today. So, why did crypto prices crash under Trump?

President Trump has been highly pro crypto 

Donald Trump is the most pro-crypto president in American history. In his tenure, he passed the GENIUS Act, which focused on the stablecoin industry, and is now championing the CLARITY Act, which aims to simplify how the industry is regulated.

Trump appointed Paul Atkins to head the Securities and Exchange Commission, replacing Gary Gensler, who was openly against the industry.

Atkins, a former crypto lawyer, has embraced a light-touch regulatory approach to the crypto industry. For example, he ended several lawsuits brought by Gensler, including on companies like Coinbase, Uniswap, and Immutable.

He also approved altcoin ETFs on tokens like XRP, Solana, Avalanche, and Dogecoin, a move meant to bring institutional capital to the crypto industry.

At the same time, other government agencies have embraced a more friendly approach to the crypto industry. For example, the Office of the Comptroller of the Currency (OCC) has granted a provisional banking charter to some of the biggest players in the industry like Ripple Labs, Circle, BitGo, and Paxos.

Why the crypto market crashed under Trump 

There are a few reasons why the crypto market crashed under Trump. First, under Trump, the US has become highly volatile in terms of policy, including his fights against the Federal Reserve, trade wars, and the ongoing US-Iran war. These risks have affected the industry because Bitcoin and other altcoins are widely seen as risky assets.

Second, eliminating the guardrails that Gensler put in place made the crypto industry less safe as more celebrities launched their meme coins. Trump himself launched the Trump Coin, while his wife launched the MELANIA token. 

All these tokens have all crashed by nearly 100%, leading to a substantial liquidity drain in the industry. Most investors who lost their money in these tokens will likely never return to the industry.

At the same time, Trump launched World Liberty Financial, which has been accused of brazen corruption. The United Arab Emirates invested $2 billion in Binance using the USD1 coin. Today, the company is making millions of dollars from these funds, which explains why he pardoned Changpeng Zhao.

Third, crypto hacks have soared since Trump exited the presidency. Data compiled by DeFi Llama shows that the total value hacked in the last 12 months soared to $1.63 billion, with most of the hacking happening this month. 

Over $629 million in assets have been stolen this month, with the most notable one being the KelpDAO hack, which cost investors over $250 million. Some of the other hacks include Rhea Lend, Hyperbridge, Cyrus Finance, Resolv, and IoTex. 

Fourth, Donald Trump has not achieved some of the promises he made during his term. For example, he did not launch the Strategic Bitcoin Reserve, which would have seen the government go on a buying spree. At some time, Trump teased a Made in America fund made up of tokens like Solana and Cardano.

Additionally, the Federal Reserve has embraced a more hawkish tone during the Trump presidency, with interest rates remaining above 3%. The bank has maintained higher interest rates because of Trump's policies that have led to higher inflation. 

At the same time, the much-anticipated altcoin ETFs have largely backfired, with most of them, including Dogecoin, Avalanche, Polkadot, and Hedera, having no major inflows.