Policy Tailwinds and Bewilderment Behavior run in parallel, is Trump a true Crypto Builder or a larger Scythe?

Ever since former President Trump and his wife launched their own meme coins $Trump and $MELANIA, attracting a huge amount of funds, the cryptocurrency market has quickly fallen into a liquidity crisis. On the other hand, the impact of the domestic AI giant model DeepSeek, the cancellation of Bitcoin's legal tender status by sovereign nations, and a series of bearish news such as the U.S. imposing tariffs have further worsened the already sluggish market.

The first major post-New Year drop was triggered by Trump's tariff hike.

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Policy Impacting Price? The Highly Sensitive Cryptocurrency Market

Trump's tariff policy is severely impacting the market. U.S. President Donald Trump signed a tariff order on February 1 local time, imposing an additional 25% tariff on imported products from Canada and Mexico, a 10% tariff on energy resources from Canada, set to take effect on the 4th. In addition, on the 1st, Trump signed an executive order to impose an additional 10% tariff on goods imported from mainland China.

The global risk markets reacted swiftly, with cryptocurrencies hit first. Bitcoin's price plummeted rapidly from around $105,000 on the same day, breaking below the $100,000 mark, even dropping below $92,000 at one point, with a more than 7% drop within 24 hours. Ethereum dropped by about 25% at one point, to the lowest level since early September last year, and other mainstream cryptocurrencies also plunged one after another, with declines of over 10%, marking an epic crash.

On February 3, Trump stated that he had reached an agreement with the Mexican president and decided to immediately suspend the anticipated tariffs for a month. Bitcoin rebounded to a high of $102,500 after the tariff policy delay, while Ethereum rebounded to $2,923, and other mainstream coins also rebounded to their prices before the crash.

Jeff Park, Head of Bitwise Alpha Strategies, stated that tariffs may be just a temporary tool, but in the long run, Bitcoin will not only rise but will rise faster because both parties in the trade imbalance want Bitcoin. Therefore, the ultimate result is the same: higher prices and faster speed.

It can be said that the imposition of tariffs has led to a sharp decline in the global stock market, and with other bearish news, the cryptocurrency market has also seen a decline. The tariffs are not only reshaping the international trade landscape but are also dealing a heavy blow to global financial market confidence. Given the cryptocurrency market's emerging, high-risk, high-return, and relatively undeveloped regulatory characteristics, it has become one of the most sensitive areas in this storm, once again highlighting the increasingly close relationship between the cryptocurrency market and global macroeconomic policies.

Meme Coin Drains Market Liquidity

On January 18, 2025, Donald Trump announced the launch of his personal Meme coin $TRUMP on his social media account. Upon its release, the coin saw a staggering price surge, exceeding 15,000% in just 12 hours, reaching around $30, with a peak market cap of over $800 billion. This remarkable price increase and massive market cap swiftly attracted a large influx of funds. Many investors who originally held Bitcoin, Ethereum, and other mainstream cryptocurrencies started selling off their other holdings to go all-in on $TRUMP. Apart from SOL, most other coins experienced significant sell-offs, causing a sharp downturn in other meme coins, AI Agent tokens, and more.

Furthermore, the $TRUMP issuing team holds a whopping 80% of the locked coins, granting them significant price manipulation power. As the lock-up period gradually unlocks in the future, whether through direct dumping on exchanges or staking in DeFi chains, it could potentially have a huge impact on the market. This behavior will further disrupt the market order of the cryptocurrency world, making it harder for other truly valuable cryptocurrency projects to receive funding support, leading to an imbalance in the entire crypto ecosystem.

The blood-sucking effect of Trump's coin issuance not only caused unreasonable short-term capital flows in the crypto world but also had a severe negative impact on the development and market stability of other cryptocurrency projects. It pressed pause on the once-thriving DeSci, DeFAI, and AI Agent sectors. Based on the crypto industry's fast-paced nature of hyping new projects and dropping old ones, these sectors will need a significant push to regain their momentum. This has brought more uncertainty and risk to the crypto world.

BitMEX co-founder and Chief Information Officer Arthur Hayes believes that $TRUMP's surge to nearly $1 trillion in fully diluted valuation (FDV) within 24 hours is an utterly absurd market signal. The meteoric rise of $TRUMP is akin to the 2021 bull market advertisement sign of FTX purchasing a Major League Baseball referee — it symbolizes the approaching market top.

Exit Scam Pump and Dump: WLFI's Bewildering Behavior

Arkham data reveals that on the night of February 3, World Liberty Financial conducted a large-scale cryptocurrency asset transfer. Their ETH holdings plummeted from around 66k on February 2 to 52, nearly liquidating all their ETH assets, with the majority flowing into a Coinbase Prime deposit address.

At this sensitive moment of asset transfer, Eric Trump, son of former President Trump, expressed on his social media platform that now is the best time to add to ETH. In the initial version of the tweet, there was also a line at the end saying, "You can thank me later."

The community raised doubts about this. Some attentive investors noticed that the ETH holdings decreased from 66k to 66, missing just one unit. This seemed like an attempt to avoid detection of the asset transfer, leading to suspicions of a rug pull conspiracy. WLFI explained that these actions were aimed at maintaining a robust, secure, and efficient financial system, solely reallocating assets for regular business purposes without token sales. However, once the funds were transferred to Coinbase Prime, the actual use remained unknown, and investors could only analyze based on coin price fluctuations and WLFI's subsequent asset operations.

Interestingly, on the morning of February 6, Eric made another public call for BTC while mentioning the family project WLFI. The community jokingly asked, "Should we sell Bitcoin next?" Perhaps this was indeed a pre-dump signal, maybe to boost confidence suppressed by tariff increases, or just a routine promotion of the family project, as issuing calls and announcements was a common practice among these individuals.

Crypto Tsar, or Crypto Rug-Pull?

David Sacks, Chairman of the Crypto Council, is well-known as one of the PayPal founders and later gained fame by creating Yammer and selling it to Microsoft for $1.2 billion. In the crypto world, David Sacks' most significant roles are as an investor in the crypto venture capital firm Multicoin and a Solana maximalist, often referred to as the "Crypto Tsar."

Since $TRUMP is deployed on the Solana blockchain and Trump issued $TRUMP coins, David Sacks has always remained silent on these "zero-sum meme coins." Therefore, many believe that this Chairman of the Crypto Council has some involvement in them.

Another piece of evidence is that David Sacks has a "criminal record." In March 2024, David Sacks posted about a memecoin called $Sacks, named after himself.

Although he tweeted nine times telling people not to buy as they began purchasing, this has already confirmed his "coin issuance" history, which is exactly the same tactic as issuing $TRUMP coin. (According to community feedback, David Sacks recently deleted his posts about $Sacks.)

Image Source Community

This has made many people start to dislike David Sacks, feeling that his methods are too focused on quick gains and too eager to profit through this aggressive means. Even if Sacks did not directly participate, as the chairman of the Crypto Council, he should take responsibility for this incident. There are even rumors that some have proposed replacing the entire leadership of David Sacks' Crypto Council team with a new lineup.

Related Reading: "Trump's Coin Creation Makes Chinese Earn Billions, U.S. Crypto Community Divides"

On February 5, at a press conference held at 3:30 Beijing time, David Sacks reiterated his work goals, such as "establishing a clear crypto regulatory framework," "ensuring crypto innovation happens on U.S. soil," and "ushering in a golden age of digital assets," but did not disclose any new (or specific) content. When mentioning the establishment of a Bitcoin reserve, David Sacks also used the word "evaluate," which is a less definitive term (previously, when the U.S. government had to address the issue but did not want to truly resolve it, they would use the word "evaluate" to be evasive). Perhaps due to the press conference "not announcing any bullish news," market expectations were dashed, causing Bitcoin to fall below $99,000 to a low of $96,147.

Is he a true builder or a wielder of an even larger scythe?

Looking back on Trump's behavior over the years, his attitude toward cryptocurrency has undergone a significant transformation. During his last term, he publicly called Bitcoin and other cryptocurrencies a "scam," but now he has promised to make the United States the global "capital of cryptocurrency" and a "Bitcoin superpower." He has also formed a cryptocurrency group, established a family DeFi project, lifted restrictions on new token sales, and strengthened the connection between cryptocurrency companies and other traditional financial institutions.

There may be multiple reasons behind Trump's attitude change. On the one hand, the cryptocurrency market has developed rapidly in recent years, with a large investor base and significant economic influence. Courting this segment of power can help increase his political support. On the other hand, there are powerful interest groups behind the cryptocurrency industry that may influence Trump through political donations, pushing him to enact policies favorable to cryptocurrency development. Additionally, Bitcoin can be seen as a tool to hedge against the weakening of the US dollar's status. Trump's inclusion of it in the national strategic reserves is also a means to attract capital inflows and maintain the dominance of the dollar.

With the election results in, Trump's every move has gradually become a focal point in the crypto community. Especially before taking office, Trump launched his own meme coin, triggering a frenzy among countless investors inside and outside the community, creating many legendary stories of sudden wealth. It was thought to be the beginning of a bull market, but the issuance of the $MELANIA token shattered this illusion, causing the market to calm down and question the purpose of the coin's issuance. The previously booming AI Agent was drained by $TRUMP and $MELANIA, further dampened by deepseek shocks, and has been in a slump ever since. Although the meme frenzy continues, the peak market cap of many tokens keeps shrinking, the time to return to zero shortens, mainstream coins continue to fall after the celebration, prompting us to ponder whether Trump's personal involvement in crypto is truly aimed at being a builder or simply exploiting his term for the maximum benefit of his interest groups and US hegemony, leaving behind a mess in the end?

In the short term, the market will inevitably experience sharp rises and falls to digest various major developments, but long-term value growth and industry sedimentation require not only favorable policies but also a two-way game between the market and politicians. Based on his series of commitments and statements, Trump seems to have a supportive attitude toward cryptocurrency. However, the huge shift in his past remarks and positions makes it difficult to fully believe. Will he really go all out to promote cryptocurrency development and make the US a cryptocurrency haven? Trump, known for his "unexpected" nature, once in office, whether the promised favorable policies can actually be implemented, or if all this is just a facade for political gain, is filled with uncertainty.

For cryptocurrency investors, Trump's current attitude and policy direction are like a double-edged sword. If he truly fulfills his promises and creates a relaxed, friendly environment for cryptocurrency development, the crypto community is likely to usher in a new era of prosperity. However, Trump's frequent sanctions against other countries after taking office, his own and his family's controversial business practices, and the internal conflicts within his administration can also exacerbate global economic and political instability, leading to unpredictable outcomes in his cryptocurrency policy. This instability can spread investor panic, impacting the cryptocurrency market negatively.

It can be said that Trump's imposition of tariffs was just the beginning of his impact on the crypto world during his presidency. In the future, as he advances and implements policies in various areas such as the economy and foreign affairs, the crypto world will likely face even more intense volatility. In such an environment, investors need to closely monitor policy developments and make investment decisions more cautiously.

The bigger the storm, the bigger the fish. Regardless of what unknowns lie ahead, this crypto ship has already set sail, ready to face the challenges and storms.