How Crypto Became a Trump Trade
It’s primarily a vehicle for crony capitalism now
Paul Krugman
Oct 14, 2025
By now it’s obvious that Donald Trump suffers from CBS — Cowardly Bully Syndrome.
On Friday, Trump blasted China’s new export controls on rare earths, declaring them a “moral disgrace” which were “obviously a plan devised by them years ago.” And he threatened to impose 100 percent tariffs on China, on top of the already high existing tariffs.
Less than a day later he was groveling:
So it only took a few hours to go from “a plan devised by them years ago” to they “just had a bad moment,” from “moral disgrace” to “highly respected President Xi.” The Chinese must be having a good laugh: They took Trump’s measure and he came out looking very, very small.
But what caused this quick, abject retreat? I’d like to believe that economic experts within the administration took a sober look at the situation and concluded that China would have the upper hand in a trade war. But there are no economic experts in this administration, and anyway, who would dare to tell Trump anything he doesn’t want to hear?
No, Trump was almost certainly reacting to the markets. Stocks fell sharply Friday, but the really striking action came in crypto, where Bitcoin fell 20 percent and smaller, less liquid tokens fell even more. Here, to take an arbitrary example, is what happened to the value of the official Trump coin:
Also, it just so happens that Trump himself holds an estimated $870 million worth of Bitcoin, so he suffered large personal financial losses from the crypto crash.
This was the largest one-day crash crypto has experienced so far. My question, however, is why the prospect of an intensified trade war caused a crypto crash.
Oddly, I’ve seen almost no reporting about this issue.
continued https://open.substack.com/pub/paulkrugman/p/how-crypto-became-a-trump-trade
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