Ever since Trump and his wife released their own meme coins $Trump and $MELANIA, which attracted huge amounts of capital, the cryptocurrency market has been in a state of liquidity depletion in a short period of time. On the other hand, a series of negative news, including the impact of the domestic AI large model DeepSeek, the cancellation of Bitcoins legal tender status by sovereign states, and the USs imposition of tariffs, have made the already sluggish market even worse.
The first big drop after the new year was caused by Trumps imposition of tariffs.
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Policy-bound currency prices? Highly sensitive crypto market
Trumps tariff policy is having a strong impact on the market. On February 1, local time, US President Trump signed a tariff order to impose an additional 25% tariff on imports from Canada and Mexico and a 10% tariff on energy resources from Canada, which is tentatively scheduled to take effect on the 4th. In addition, Trump signed an executive order on the 1st to impose an additional 10% tariff on goods imported from mainland China.
The global risk market reacted quickly, with cryptocurrencies bearing the brunt. On the same day, the price of Bitcoin fell sharply from around $105,000 to $100,000, and even fell below $92,000, a drop of more than 7% in 24 hours. Ethereum once fell by about 25% to its lowest level since early September last year. Other mainstream cryptocurrencies also plunged, with a drop of more than 10%, which can be called an epic plunge.
On February 3, Trump said that he had reached an agreement with the Mexican president to immediately suspend the expected tariffs for one month. After the tariff policy was delayed, Bitcoin rebounded to $102,500, Ethereum rebounded to $2,923, and other mainstream currencies also rebounded to the prices before the big crash.
Jeff Park, head of strategy at Bitwise Alpha, said tariffs may only be a temporary tool, but in the long run, Bitcoin will not only go higher, but also go faster because both parties in the trade imbalance want Bitcoin, so the end result is the same: higher prices and faster speed.
It can be said that the tariff increase has caused a sharp drop in global stock markets, and along with other negative news, the cryptocurrency market has also fallen. The tariff increase is not only a reshaping of the international trade pattern, but also a heavy blow to the confidence of the global financial market. The cryptocurrency industry has become one of the most sensitive areas in this storm due to its emerging, high-risk, high-return and imperfect regulatory characteristics, which once again confirms the increasingly close connection between the cryptocurrency industry and global macroeconomic policies.
Issue meme coins to suck blood from the market
On January 18, 2025, Trump announced the launch of his personal meme coin $TRUMP on his social account. Once launched, the coin rose by more than 15,000% in just 12 hours, reaching around $30, with a peak market value of more than $80 billion. Such an astonishing increase and huge market value quickly attracted a large influx of funds. Many investors who originally invested in mainstream cryptocurrencies such as Bitcoin and Ethereum successively sold other currencies in their hands and turned to $TRUMP. Except for SOL, other currencies were sucked out in large quantities in the short term, and other meme coins, AI Agent tokens, etc. fell sharply across the board.
In addition, the issuing team of Trumpcoin holds up to 80% of the locked coins, which means that they have a strong ability to manipulate the price of the coin. After the lock-up period is gradually unlocked in the future, whether it is directly dumping the market on the exchange or staking on the DeFi chain, it may have a huge impact on the market. At the same time, this behavior will further disrupt the market order of the currency circle, making it more difficult for other truly valuable cryptocurrency projects to obtain financial support, causing an imbalance in the entire currency circle ecosystem.
The blood-sucking effect brought about by Trumps coin issuance not only led to irrational flow of funds in the cryptocurrency circle in a short period of time, but also had a serious negative impact on the development of other cryptocurrency projects and the stability of the market, pressing the pause button on DeSci, DeFAI and AI Agent, which were originally in full swing. According to the fast pace of the cryptocurrency circle that always speculates on new things instead of old ones, these sectors will inevitably need greater impetus to revive their glory. The cryptocurrency circle faces more uncertainties and risks.
Arthur Hayes, co-founder and CIO of BitMEX, believes that $TRUMPs crazy surge to a fully diluted valuation (FDV) of nearly $100 billion in 24 hours is absolutely an absurd market signal. The surge in $TRUMP is similar to FTXs purchase of the Major League Baseball umpires advertising logo during the 2021 bull market - it symbolizes that the market top is approaching.
Calling orders after liquidation, WLFIs confusing behavior
Arkham data shows that World Liberty Financial carried out a large-scale transfer of crypto assets on the evening of February 3, with ETH holdings falling from around 66k on February 2 to 52, almost completely liquidating its ETH assets, mainly flowing into Coinbase Prime deposit addresses.
At this sensitive time of asset transfer, Trumps second son Eric Trump said on his social media platform that now is the best time to increase ETH holdings (In my opinion, its a great time to add ETH.). The original version of the tweet also included a sentence You can thank me later.
The community questioned this, and some careful investors believed that the ETH holdings dropped from 66k to 66, only one unit less, which was obviously to avoid being discovered for asset transfers, and then suspected whether there was a conspiracy group cutting leeks. WLFI explained that these measures are aimed at maintaining a strong, secure and efficient financial system, and are only for ordinary business purposes. The purpose of reallocating assets will not be sold. However, once the funds are transferred to Coinbase Prime, we have no way of knowing what they are used for, and investors can only analyze them based on the fluctuations in the currency price and the subsequent asset operations of WLFI.
Interestingly, on the morning of February 6, Eric publicly called for BTC again, and mentioned the family project WLFI. The community jokingly said, Is it time to sell Bitcoin next? Maybe this was indeed a call before shipment, maybe it was to boost confidence that was suppressed by the tariff increase, or maybe it was just a routine promotion of the family project. After all, calling for orders and cx are the norm for these people.
Crypto Czar, but also Crypto Czar?
David Sacks, the chairman of the Crypto Committee, is well-known as one of the founders of PayPal. He later became famous by creating Yammer and selling it to Microsoft for $1.2 billion. In the cryptocurrency circle, David Sacks most important identity is an investor in the crypto venture capital firm Multicoin and a Solana maximalist, known as the Crypto Tsar.
Because $TRUMP is deployed on the solana chain, and David Sacks remained silent about these zero-sum meme coins when Trump issued $TRUMP coins, many people believe that the chairman of the crypto committee must be involved.
Another piece of evidence is that David Sacks has a criminal record. In March 2024, David Sacks posted a post about the memecoin $Sacks with his own name.
Although he tweeted nine times when people started buying to tell them not to buy, this has established the evidence that he had issued coins before, which is exactly the same as the method of issuing $TRUMP coins. (According to feedback from community members, David Sacks recently deleted his posts about $Sacks.)
Image source: community
This made many people dislike David Sacks, who felt that his methods were too quick to achieve success and too eager to seek benefits through such radical means. Even if Sacks was not directly involved, as the chairman of the Cryptography Committee, he should be held responsible for the incident. There are even rumors that someone proposed that the entire leadership team of David Sacks Cryptography Committee should be replaced with a new team.
Related reading: Trumps coin issuance made Chinese people earn hundreds of millions, and the American crypto community was divided
On February 5, David Sacks reiterated his work goals of clarifying the regulatory framework for cryptocurrencies, ensuring that crypto innovation occurs in the United States, and creating a golden age for digital assets at a press conference that started at 3:30 Beijing time, but did not announce any new (or specific) content. When referring to the establishment of Bitcoin reserves, David Sacks also used the less affirmative word evaluate (previously, the US government used the word evaluate to play Tai Chi when it had to deal with the problem but did not want to really solve it). Perhaps affected by the markets expectations being dashed due to the press conference not releasing any good news, Bitcoin fell back below $99,000, falling to a low of $96,147.
Is it the real builder, or a bigger sickle?
Looking back at Trumps behavior over the years, his attitude towards cryptocurrency has changed significantly. During his last term, he publicly stated that cryptocurrencies such as Bitcoin are scams, but now he has promised to make the United States the worlds cryptocurrency capital and Bitcoin superpower. He has also formed a cryptocurrency group, established a family Defi project, lifted restrictions on the sale of new tokens, and strengthened the connection between cryptocurrency companies and other traditional financial companies.
There may be many reasons behind Trumps change of attitude. On the one hand, the cryptocurrency market has developed rapidly in recent years, with a large investor group and huge economic influence. Winning over this part of the power will help increase his political support rate; on the other hand, there are powerful interest groups behind the cryptocurrency industry, which may exert influence on Trump through political donations and other means, prompting him to introduce policies that are conducive to the development of cryptocurrency. In addition, Bitcoin can be seen as a tool to hedge against the shaken status of the US dollar. Trumps inclusion of it in the national strategic reserve is also a means to attract capital inflows and maintain the hegemony of the US dollar.
As the election results came out, Trumps every move gradually became a weathervane for the hot spots in the cryptocurrency circle. In particular, before taking office, Trump issued his own Meme coin, which caused the madness of countless investors inside and outside the circle, and created many phenomenal myths of getting rich quickly. It was thought that this was the beginning of the bull market, but the subsequent issuance of $MELANIA tokens shattered this fantasy, making the market calm down and doubt the purpose of issuing coins. The previously in full swing AI Agent was sucked blood by $TRUMP and $MELANIA, and was hit by deepseek, and has been sluggish. Although the Meme craze continues, the highest market value of a large number of tokens continues to shrink, the return time is constantly shortening, and the mainstream coins continue to fall after the carnival. We cant help but wonder, is Trumps pro-crypto purpose really to be a builder, or to maximize the profits for his interest groups and the hegemony of the United States during his term of office, exhausting the pond and fishing, and finally leaving a drifting place?
In the short term, the market will inevitably experience ups and downs to digest various major trends, but long-term value growth and industry sedimentation require more than just favorable policies, but a two-way game between the market and politicians. Judging from his series of promises and statements, he seems to be actively supportive of cryptocurrencies. However, his past remarks and huge changes in his position make it difficult to be completely convinced. Will he really spare no effort to promote the development of cryptocurrencies and make the United States a paradise for cryptocurrencies? After taking office, Trump, who is known for his unexpected characteristics, will the favorable policies he promised really be implemented, or is all this just a superficial article for political gain? These questions are full of uncertainty.
For cryptocurrency investors, Trumps current attitude and policy direction are like a double-edged sword. If he can really fulfill his promise and create a relaxed and friendly development environment for cryptocurrencies, then the cryptocurrency industry is likely to usher in a new round of prosperity; but Trumps frequent sanctions on other countries after taking office, his and his family members criticized business style, and the contradictions and divisions within his team will also aggravate the instability of the global economy and politics, leading to unpredictable crypto policies, and this instability will cause investors panic to spread, which will have a negative impact on the cryptocurrency market.
It can be said that Trumps tariff increase is just the beginning of the impact on the cryptocurrency market after he came to power. In the future, as he promotes and implements policies in many aspects such as economy and diplomacy, the cryptocurrency market will most likely face more drastic fluctuations. In such an environment, investors need to pay close attention to policy trends and make investment decisions more cautiously.
The bigger the waves, the bigger the fish. No matter what unknowns lie ahead, this encrypted ship has set sail, ready to brave the storm.
