Is President Trump responsible for the historic liquidation of the crypto market?

Jessy (@susanliu33), Golden Finance

Half a month has passed since Trump officially took office as the president of the United States on January 20. During this period, the crypto market has also taken a roller coaster after round, especially after Trump announced the increase in tariffs. The circle of earthquakes, and the encryption circle was in a wail, shouting "The bear market has come."

After Trump came to power, although he fulfilled his campaign's commitments about the crypto industry, this did not bring much confidence to the industry. Even the market plunge caused by its tariff increase, which caused confusion like "Is Trump's coming to power a blessing or a disaster for encryption" to spread in the currency circle.

On the one hand, as the US President, Trump is actively promoting the introduction of relevant laws and regulations in the friendly crypto industry, but these positive effects seem to be "less than expected." On the other hand, companies related to the Trump family are actively deploying the crypto industry, especially issuing Meme coins, and the WLFI project is making money by making money with nothing, and is also using "using encryption to make money."

At present, the market fluctuates up and down with Trump's every move. Trump himself may not have expected that in such an industry that regards decentralization as the norm, he is regarded as the emperor and has supreme power.

As president, Trump is actively pursuing his campaign's crypto commitment

In the half month since taking office, Trump has indeed been gradually promoting the implementation of encryption-related policies and regulations, and the promises he made during his campaign have indeed been fulfilled one by one. Such as banning central bank digital currencies, firing Gary Gensler, then chairman of the U.S. Securities and Exchange Commission, establishing a Bitcoin and Cryptocurrency Advisory Committee, etc. A series of policies that are conducive to the development of the crypto industry in the United States are being implemented step by step.

Specifically, on January 23, 2025, Trump signed an executive order requiring the establishment of a working group under the National Economic Commission, chaired by David Sacks, the White House "AI and Cryptocurrency Tsar", and its members include the Treasury Secretary, the SEC Chairman, etc. . The task force is to develop a federal regulatory framework, manage digital assets (including stablecoins), and evaluate the possibility of creating a national digital asset reserve.

David Sacks first examined the feasibility of Bitcoin reserves at the first press conference on digital assets on Capitol Hill on February 4 by David Sacks and several U.S. Congress legislators, but noted that the initiative Still in its early stages.

At the meeting, U.S. Senator Bill Hagerty also proposed a bill aimed at creating a regulatory framework for stablecoins, which incorporates tokens such as Tether and USDC into the Federal Reserve's regulatory rules, and the bill also stipulates stablecoin issuers' Reserve requirements - Adopt the regulatory framework of the Federal Reserve and the Office of the Currency Supervision Bureau to establish regulatory, inspection and execution mechanisms, etc. for issuers who issue stablecoins of more than $10 billion.

In terms of legislation, it is planned to promote a new round of legislation based on the market structure legislation "FIT21" bill passed by the House Financial Services Committee last year, and is committed to bringing "clearity" to the regulatory framework. It is reported that it is expected to be in six Cryptocurrency legislation will be introduced within the month.

In addition to establishing a working group, it explicitly prohibits the establishment, issuance or promotion of central bank digital currencies in the United States in the relevant crypto-related executive order signed on January 23. It also clarifies the free use of public chains for American citizens -allowing citizens to develop and deploy software, participate in mining, trading and self-custody of digital assets.

The Trump administration's crypto-friendliness is not only reflected in executive legislation. On February 4, the SEC was revealed to have reduced its department focused on crypto law enforcement and transferred or demoted more than 50 lawyers and staff. This is also one of the first specific measures Trump has made to relax cryptocurrency regulations.

However, the introduction of the above measures did not bring great incentives to the market. What the market is most looking forward to is the real implementation of the national Bitcoin strategic reserves, but David Sacks also shows that the national Bitcoin strategic reserves are still very good Early preparation stage. However, American states have set off a competition for Bitcoin strategic reserves. If eleven states have proposed relevant bills, two of which have entered the committee approval stage. For example, Pennsylvania introduced a bill that allows the state Treasury Department to spend 10% of its funds on buying bitcoin; Texas pilots green energy mining subsidies. The federal level proposed the Bitcoin Strategic Reserves Act, which plans to purchase a total of 1 million Bitcoins within five years and promote the Bitcoin Energy and Technology Innovation Act to support green mining.

On February 3, Trump also announced the establishment of the US sovereign wealth fund. Industry insiders analyzed that the US sovereign wealth fund is likely to invest in cryptocurrencies such as Bitcoin.

Overall, Trump is indeed actively fulfilling his commitment to the crypto community during his campaign, but it involves the national Bitcoin strategic reserves, and legislation requires a fixed process. But the crypto industry seems to be unable to wait. Before the major positive news of the national Bitcoin strategic reserve appears, it will be a tribute to the decline.

It's the president, and it's the businessman Trump

As president, Trump, a former businessman, cannot participate in business operations in person. But it can hand over its business empire to its family management, which is in line with American law.

After Trump officially took office as the president of the United States, the main operation of his family's crypto career was the WLFI project. Under the agreement for the issuance of WLFI tokens, the Trump family will receive 75% of the remaining net income after deducting operating expenses and initial reserves of $30 million, which is the revenue of the Trump family. . Secondly, the Trump family will receive 22.5 billion WLFI tokens, which is worth $337.5 million based on the issuance price of 1.5 cents.

At present, people who hold pre-sale tokens for the project are unable to transfer and trade the token - forced lock in one year.

The vision of this project is to do DeFi, so it accumulated a lot of tokens in the DeFi fields such as ETH, CBTC, AAVE, Ondo, and ENA in the early stages. Previously, the industry regarded these tokens as presidential elections and followed suit and purchased them. It is precisely because of the president's ability to sell goods that these tokens have become popular among investors for some time.

Or maybe it is because of the huge wealth effect brought by the "presidential election". According to Blockworks, people familiar with the matter said that the Trump family's crypto project WLFI has been in contact with the blockchain team for "token swap" transactions. . Simply put, this kind of transaction is that the project party sends money to WLFI and purchases WLFI tokens. The WLFI team will also purchase the tokens designated by the project party, and the tokens that appear in the WLFI wallet will be exposed and promoted.

TRX appeared in WLFI's coin holding wallet, which is the role of "token swap". In mid-to-late January, Justin Sun invested a total of US$75 million in WLFI in two sessions, and in early February, WLFI's wallet was in Then TRX appeared. It is highly likely that the purchase of TRX by the WLFI project this time is a "token swap".

From WLFI's over-sale to "token exchange", WLFI's Sima Zhao's heart is well known to everyone. The WLFI token itself is a project that makes money from nothing. Investors exchange their value coins for WLFI tokens that can only be traded in one year. The WLFI project gets the value coins to purchase the above mentioned ETH, Ondo, AAVE, LINK, ENA, etc., which can be said to be useless. For WLFI project parties, the decline in these tokens is just the original profit retracement.

For WLFI projects, a decline is just a drawdown in profits, but for retail investors, it is a loss. Another unexpected move by WLFI was that on the second day after Trump's second son Eric Trump called for Ethereum, WLFI wallet showed that it transferred more than 70,000 Ethereum to Coinbase Prime. At the same time, it was transferred to Coinbase Prime, including a large number of WBTC, AAVE, LINK, ENA, Move, ONDO, and USDC. The relevant virtual currencies that were allowed to enter Coinbase Prime can no longer be tracked on the chain, although the WLFI project said it did not sell them. The cryptocurrency you hold is just reconfiguring assets, but without the evidence on the chain, it cannot be proved.

After taking office, in addition to "making a lot of money" in the crypto field, the Trump family is also involved in the traditional financial industry. On February 6, Trump's social media company Truth announced that it 6 trademarks have been registered for its customized ETF products and separate management account products, and specific financial products will be launched within the year. Judging from the names of several trademarks that have been launched, Trump Media Technology Group is likely to launch theme products in three directions: US manufacturing, energy industry and Bitcoin. These products will be attributed to Truth.Fi, the group’s newly established financial services brand.

Previously, Trump was the company's largest shareholder, and before he was sworn in last month, Trump had transferred all his shares to a trust controlled by his eldest son, Donald Trump Jr.

However, these ETFs have not yet entered the application process, but have only applied for trademarks. Even if these ETFs are finally passed, it is doubtful how much funds will flow into them.

But the above actions also illustrate that the Trump family is actively involved in the fields of traditional finance and crypto finance. However, it is still difficult to predict how loud the product can have.

However, from issuing Meme coins before taking office to the various actions of his family after taking office, it has been clarified that Trump's most fundamental background is businessmen, and pursuing profit is the nature of businessmen, which is nothing to condemn.

Summarize

Businessmen are Trump's background. As a businessman, Trump will definitely make money with crypto and also use his own influence as president.

On the other hand, as president, Trump has indeed fulfilled his promises to the crypto industry during his campaign, which also demonstrates his promise.

The recent sharp drop in the market cannot be simply attributed to Trump's various extreme behaviors: such as issuing coins, increasing tariffs, etc. Funds in the market will make choices based on various information. Trump cannot be responsible for declines or rises. A mature investor should be responsible for his investment behavior.

At present, crypto is increasingly integrated into the global financial market. The rise in crypto market not only depends on encryption-related policies, but also on the macro economic environment. There are not many favorable policies in the current macroeconomics, and the crypto industry itself is difficult to survive and can only maintain a state of anxiety.

From another perspective, is it a betrayal of an industry that advocates decentralization, staring at Trump's every move every day and counting on the coveting of US government policies?