Since Trump and his wife launched their own meme coins $Trump and $MELANIA, attracting massive funding participation, the cryptocurrency market quickly fell into a state of liquidity exhaustion. On the other hand, the impact of the domestic AI large model DeepSeek, sovereign nations canceling Bitcoin's fiat status, and a series of negative news such as increased tariffs in the U.S. further exacerbated the already sluggish market.
The first major drop after the New Year was triggered by Trump's tariff increases.
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Policy Binding to Coin Prices? The Highly Sensitive Crypto Market
Trump's tariff policy is hitting the market hard. On February 1, U.S. President Trump signed a tariff order imposing an additional 25% tariff on imports from Canada and Mexico, and a 10% tariff on energy resources from Canada, set to take effect on the 4th. Additionally, Trump signed an executive order on the 1st to impose an additional 10% tariff on goods imported from mainland China.
Global risk markets reacted swiftly, with cryptocurrencies being the first to feel the impact. On that day, Bitcoin's price plummeted from around $105,000, breaching the $100,000 mark, and even briefly falling below $92,000, with a drop of over 7% within 24 hours. Ethereum dropped about 25% to its lowest level since early September last year, and other mainstream cryptocurrencies also experienced significant declines, all dropping over 10%, marking an epic crash.
On February 3, Trump announced that he had reached an agreement with the President of Mexico to immediately suspend the anticipated tariffs for one month. After the delay in tariff policy, Bitcoin rebounded to a high of $102,500, Ethereum rebounded to a high of $2,923, and other mainstream coins also generally rebounded to prices before the major drop.
Jeff Park, Bitwise Alpha's strategic director, stated that tariffs may only be a temporary tool, but in the long run, Bitcoin will not only rise but will rise faster, as both parties in the trade imbalance want Bitcoin, leading to the same result: higher prices and faster growth.
It can be said that the imposition of tariffs led to a significant drop in global stock markets, and coupled with other negative news, the cryptocurrency market also saw declines. The tariffs not only reshape the international trade landscape but also deliver a heavy blow to global financial market confidence. The cryptocurrency market, due to its emerging, high-risk, high-reward nature and incomplete regulation, has become one of the most sensitive areas in this storm, further confirming the increasingly close connection between the cryptocurrency market and global macroeconomic policies.
Meme Coins Sucking the Market Dry
On January 18, 2025, Trump announced the launch of his personal meme coin $TRUMP on his social media account. Once launched, the coin surged over 15,000% within just 12 hours, reaching around $30, with a market cap exceeding $80 billion. Such astonishing growth and massive market cap quickly attracted a flood of funds, with many investors who originally invested in mainstream cryptocurrencies like Bitcoin and Ethereum selling off their other holdings to bet everything on $TRUMP, leading to a massive bloodletting of other coins except for SOL, while other meme coins and AI Agent tokens plummeted.
Moreover, the issuing team of Trump Coin holds as much as 80% of the locked coins, meaning they have strong control over the coin's price. As the lock-up period gradually unlocks in the future, whether through direct dumping on exchanges or staking on DeFi chains, it could have a huge impact on the market. At the same time, such behavior would further disrupt the market order in the cryptocurrency space, making it harder for other genuinely valuable cryptocurrency projects to secure funding, causing an imbalance in the entire cryptocurrency ecosystem.
The bloodsucking effect brought by Trump's coin issuance not only led to unreasonable short-term capital flow in the cryptocurrency market but also had a serious negative impact on the development of other cryptocurrency projects and market stability, pressing the pause button on the originally booming DeSci, DeFAI, and AI Agent sectors. According to the cryptocurrency market's fast-paced tradition of favoring new over old, these sectors will inevitably require greater momentum to revive. This leaves the cryptocurrency market facing more uncertainty and risk.
Arthur Hayes, co-founder and chief information officer of BitMEX, believes that the near $100 billion fully diluted valuation (FDV) of $TRUMP within 24 hours is an absurd market signal. The surge of $TRUMP is reminiscent of the FTX purchasing advertising space for MLB umpires during the 2021 bull market—it symbolizes the approach of a market top.
Clearing Positions and Confusing Behaviors of WLFI
Arkham data shows that World Liberty Financial conducted a large-scale transfer of crypto assets on the evening of February 3, with ETH holdings dropping from around 66k on February 2 to 52, almost completely clearing their ETH assets, primarily flowing into a Coinbase Prime deposit address.
At this sensitive time of asset transfer, Trump's son Eric Trump stated on his social platform that now is the best time to increase ETH holdings (In my opinion, it’s a great time to add ETH). The initial version of the tweet even included the line "You can thank me later."
The community expressed skepticism, with attentive investors noting that the ETH holdings dropping from 66k to 66 is a clear attempt to avoid detection of asset transfer, leading to suspicions of a conspiracy to exploit investors. WLFI explained that these actions aim to maintain a strong, secure, and efficient financial system, and are merely reallocating assets for ordinary business purposes, without selling tokens. However, once the funds are transferred to Coinbase Prime, we cannot know their ultimate use, and investors can only analyze based on price fluctuations and subsequent asset operations by WLFI.
Interestingly, on the morning of February 6, Eric publicly called for BTC while also mentioning the family project WLFI, leading the community to jokingly ask, "Is it time to sell Bitcoin next?" Perhaps this was indeed a call before unloading, perhaps to boost confidence suppressed by the tariff increases, or perhaps just routine promotion of the family project, as calling and cx are the norm for these individuals.
Crypto Tsar, but also a Major Exploiter?
David Sacks, chairman of the Crypto Council, is well-known as one of the founders of PayPal and later gained fame by creating Yammer and selling it to Microsoft for $1.2 billion. In the cryptocurrency space, David Sacks is most notably an investor in the crypto venture capital firm Multicoin and a major proponent of Solana, earning the title "Crypto Tsar."
Since $TRUMP is deployed on the Solana chain, and David Sacks remained silent about these "zero-sum meme coins" when Trump launched the $TRUMP coin, many believe that the chairman of the Crypto Council is somehow involved.
Another piece of evidence is that David Sacks has a "criminal record." In March 2024, David Sacks posted about his own memecoin $Sacks.
Although he tweeted nine times telling people not to buy when they started purchasing, this has already solidified the evidence that he "once issued a coin," which is exactly the same method used for launching the $TRUMP coin. (According to community members, David Sacks recently deleted his posts about $Sacks.)
Image source: Community
This has led many to develop a distaste for David Sacks, feeling that his methods are too opportunistic and overly eager to profit through such aggressive means. Even if Sacks did not directly participate, as the chairman of the Crypto Council, he should be held accountable for this incident. There are even rumors suggesting that someone proposed replacing the entire leadership team of David Sacks' Crypto Council with a new one.
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On February 5, David Sacks reiterated his goals during a press conference that started at 3:30 AM Beijing time, including "establishing a clear regulatory framework for cryptocurrencies," "ensuring that crypto innovation occurs in the U.S.," and "creating a golden age for digital assets," but did not announce any new (or specific) content. When mentioning the establishment of a Bitcoin reserve, David Sacks used the term "evaluate," which carries a lighter degree of affirmation (previously, the U.S. government would use the term "evaluate" when it had to address the issue but did not want to genuinely resolve it). Perhaps due to the press conference "not releasing any positive news," market expectations were dashed, causing Bitcoin to fall below $99,000, hitting a low of $96,147.
Is he a true builder, or a bigger scythe?
Looking back at Trump's actions over the years, his attitude towards cryptocurrencies has changed significantly. During his previous term, he publicly stated that cryptocurrencies like Bitcoin were a "scam," but now he promises to make the U.S. the global "crypto capital" and a "Bitcoin superpower," has formed a cryptocurrency task force, established a family DeFi project, lifted restrictions on new token sales, and strengthened ties between cryptocurrency companies and other traditional financial enterprises.
There may be multiple reasons behind Trump's change in attitude. On one hand, the cryptocurrency market has developed rapidly in recent years, boasting a large investor base and significant economic influence; courting this power could help increase his political support. On the other hand, there are powerful interest groups behind the cryptocurrency industry that may exert influence on Trump through political donations, prompting him to implement policies favorable to cryptocurrency development. Additionally, Bitcoin can be seen as a tool to hedge against the weakening status of the dollar, and incorporating it into national strategic reserves is also a means to attract capital inflows and maintain dollar hegemony.
As the election results come in, Trump's every move gradually becomes a barometer for the cryptocurrency market. Especially before taking office, Trump launched his own meme coin, causing a frenzy among countless investors both inside and outside the circle, creating many phenomenal wealth myths. It was initially thought to be the start of a bull market, but the subsequent issuance of the $MELANIA token shattered this illusion, causing the market to cool down and question the purpose of his coin issuance. The previously booming AI Agent sector was heavily drained by $TRUMP and $MELANIA, and coupled with the impact of DeepSeek, it has remained sluggish. Although the frenzy for memes continues, the market cap of many tokens is shrinking, the time to zero is shortening, and mainstream coins continue to decline after the celebration. We can't help but ponder whether Trump's pro-crypto stance is genuinely aimed at being a builder or if he is maximizing profits for his interest groups and U.S. hegemony during his term, ultimately leaving a trail of devastation.
In the short term, the market will inevitably experience wild fluctuations to digest various major trends, but long-term value growth and industry consolidation require more than just favorable policies; they necessitate a two-way game between the market and politicians. From his series of commitments and statements, he seems to hold a positive supportive attitude towards cryptocurrencies. However, his past remarks and the significant shift in stance make it hard to fully trust him. Will he truly spare no effort in promoting the development of cryptocurrencies and make the U.S. a paradise for them? Known for his "unexpected" nature, will the favorable policies he promised after taking office truly be implemented, or are they merely superficial gestures for political gain? These questions are filled with uncertainty.
For cryptocurrency investors, Trump's current attitude and policy direction are like a double-edged sword. If he can indeed fulfill his promises and create a relaxed, friendly development environment for cryptocurrencies, the market may very well usher in a new wave of prosperity. However, Trump's frequent sanctions against other countries, his family's criticized business style, and the internal conflicts and divisions within his team could exacerbate global economic and political instability, leading to unpredictability in his crypto policies, and this instability could spread panic among investors, negatively impacting the cryptocurrency market.
It can be said that Trump's tariff increases are just the beginning of his influence on the cryptocurrency market after taking office. In the future, as he advances and implements policies in various areas such as the economy and diplomacy, the cryptocurrency market is likely to face even more severe fluctuations. In such an environment, investors need to closely monitor policy dynamics and make investment decisions with greater caution.
The bigger the storm, the bigger the fish. Regardless of the unknowns ahead, this ship of cryptocurrency has set sail, ready to face the turbulent waves.
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