Krugman: Trump's Plummet in Popularity Explains Bitcoin's Performance

Source: Exame Original Title: Paul Krugman: decline in Donald Trump's popularity has caused Bitcoin to drop Original Link: The Nobel Prize-winning economist Paul Krugman stated that the real reason behind the sharp drop in bitcoin in recent days is the declining popularity of President Donald Trump. According to the economist, the future of the cryptocurrency is now directly tied to the political strength of the President of the United States.

The performance of the cryptocurrency surprised investors, and the asset even returned all gains recorded in 2025. According to analysts, the movement was the result of a combination of adverse macroeconomic factors and specific causes in the crypto world.

Krugman states that the president of the United States was also responsible for the decline. He highlights that bitcoin is part of the so-called “Trump Trade,” referring to a group of assets that surged right after the politician's victory in the 2024 elections.

Trump ran a campaign with a strong pro-crypto speech, promising favorable regulation for the sector and an incentive for the adoption of cryptocurrencies in the country. Because of this, the sector experienced intense appreciation during the period between the election and Trump's inauguration.

Now, the Nobel Prize in Economics argues that a weakening of Trump's popularity may limit the political actions that the president can take in the coming years of his term. Because of this, the government's benefits for bitcoin and other assets may not materialize.

“Trump's power is visibly diminishing, so the price of bitcoin, which has practically become a bet on Trumpism, has plunged. Why is bitcoin a Trump Trade? In part because Trump, whose family has received massive bribes from the cryptocurrency industry, has rewarded this investment with pro-cryptocurrency policies,” he says.

For Krugman, “a weakened Trump has less ability to impose his will on all fronts, including his efforts to promote cryptocurrencies.” As a result, investors and institutions have begun to reassess the price of cryptocurrencies in the short term.

In addition to the assessment, the economist also shared one of his well-known criticisms of bitcoin: “What is bitcoin for? It is not money — that is, it is not a medium of exchange, something you can use to make payments. And it is not a protection against inflation.”