A Few Reasons Why Crypto is Nuking
Crypto is getting rinsed with no clear bottom in sight
Trump's election was supposed to be a dream come true for crypto because he’d surely pump it to Valhala, especially after saying he wants to make the US the crypto capital of the world.
His crypto policy was set to legitimize the industry instead of attacking it, which was a refreshing approach after Operation Chokepoint 2.0.
For the first time, there would be a clear regulatory framework, and laws would be enacted to foster innovation instead of hindering it.
Promises Made, Promises Kept
Here are some highly bullish things Trump has already done for crypto which should have pumped the price by now:
Hire David Sacks to lead prop crypto legislation and regulation
Appointed Hester Peirce to lead the new Crypto Task Force
Tell Gary Gensler to take a hike
Host the very first crypto summit at the Whitehouse
Sign an executive order for the Bitcoin Strategic Reserve
Launch a crypto project (World LibertyFi
Buy millions of Ethereum (the dying communist chain)
But none of that matters as the price continues to fall into the shadow realm.
Many altcoins have completely retraced their Trump pump gains.
Bitcoin has held up surprisingly well during this blood bath, but it’s on shaky ground now.
Things were much different during election night when it was clear Trump would be elected.
Bitcoin went from $68,000 to $107,000, and the rest of the market rallied alongside it.
Times have changed, and the euphoria of the election pump is gone.
The only thing that’s left is a brutal hangover that smells like broken dreams and last night’s regrets.
Bitcoin now sits at $80,854, looking weaker and weaker by the day.
No asset is safe, as the stock market is tanking as well.
So why is the market tanking with so much bullish information and a bag-pumping president in office?
There are a lot of different theories floating around, but here are the main reasons:
Trade War and Tariffs
Every day, there’s a new headline about a new tariff, either from Trump flexing on world leaders or another country retaliating.
Tariffs have sparked fears of inflation and economic instability, leading to risk aversion among investors.
Institutional Profit-Taking
We finally got what we wanted!
The institutions arrived and bought the ETFs hand over fist, so why did the number go down?
Wait, you didn’t really think that institutions would HODL through a 50% drawdown, did you?
Institutions take profits, especially if crypto is on balance sheets.
They definitely will not hold for a loss if they can avoid it.
They also don’t have the moxie to hold an asset that draws down 50%+.
Remember, a 3% gain for them is printing; they consider a “crash” to be 20% or greater.
In crypto, if an asset pulls back 80%, it just is what it is, but that doesn’t mean institutional capital will hold on for the ride.
Economic Reset
What’s happening now is a controlled demolition of sorts.
Instead of fixing Biden's economy, which Trump bashed relentlessly, Trump crashes the market and rebuilds it exactly how he wants it to be.
If he tries to fix what Biden has done over the last four years, it will never truly be his.
If he crashes the markets and revives them, flooding them with euphoria, he will be considered a hero.
They say people don’t remember what you do. Instead, they remember how you feel, and there’s no bigger adrenaline rush than green candles.
Lower interest rates
Jerome Powell has been stubborn about interest rates.
He refuses to cut until inflation hits 2%, but he’s never had to deal with a master negotiator like Trump, who puts maximum pressure on his opponents.
By crashing the markets, Jerome may have no choice, which is what Trump has wanted all along.
Memecoin Disgust
Memecoins were something people embraced because they became disillusioned with the VC layer-1 launch playbook.
Sure, memecoins are scams, but at least they didn’t have insider VCs up 10x by the time retail started to buy.
What was once considered the purest form of crypto is now no different from the pump-and-dump VC schemes of the early days of crypto.
People are disgusted after learning about the insider extraction game played out toward the end with Kelsier, Meteora, and Jupiter.
And they are dumping to show their disgust.
Where Do We Go From Here?
If layer-1s are worthless vaporware and memecoins are just extraction scams, what is left to do in crypto?
Judging from the talking points from Trump and Howard Lutnick, this might take a while to play out.
Q1 is currently a wash, and even if we start to reverse in Q2, the overall structure will take a while to rebuild.
As of today, unless Trump makes a 180-degree policy shift, a V-shaped recovery doesn’t look likely.
So my message to you, if you haven’t already sold, is to hang on and let this play out. There’s no way Trump will allow the stock market or crypto to tank for his entire presidency.
At some point, he will swoop in and save the market.
I just have no idea when that could be or how much lower we could go first.