Wall Street and the world are finally waking up to the troubling reality that Trump's tariff tantrums are not going away, threatening global growth, reshaping alliances, and disrupting the world order. For now, he also seems unfazed about the tariff-induced stock market correction or that warning signals are flashing of a U.S. recession this year.
Cryptoassets like Bitcoin were for a time the darling of the so-called "Trump Trade" — the basket of financial assets that were supposed to benefit from a Trump presidency — soaring in the aftermath of the election, as Trump pledged to completely overhaul the government's approach to the industry.
Hopes were high that Trump would be pro-business and embrace policies friendly to innovation industries like crypto and AI and so far, he has delivered on several promises. He has appointed pro-crypto administrators to key agencies and cabinet positions. Led by his allies in the House and Senate, a bipartisan majority in Congress voted to repeal the "DeFi Broker Rule," which would have required open-source software developers to register as broker-dealers to the IRS under U.S. law.
On the AI front, he appointed David Sacks to be Crypto and AI Czar and he has received pledges from business leaders to continue investing in AI infrastructure in the United States. The federal government is reportedly investigating the use of blockchain to reduce waste and improve efficiency. These are all positive developments.
However, there are troubling aspects to this story. Trump has undermined his credibility on the issue, first by launching World Liberty Financial, a crypto scheme promoted online by his sons, and then upping the stakes with the disastrous launch of his TRUMP and MELANIA "meme-coins" (both of which have declined more than 85% since launch), seen by many as a money-making scheme launched by the incoming President on the eve of his inauguration when attention and interest were at its absolute highest.
Readers of this newsletter will know that we raised concerns at the time about the obvious conflict of interest and the lack of disclosure about $TRUMP, the eponymous memecoin. Doubtless many Trump fans bought into the asset hoping to be invested alongside their hero, only to watch most of their investment evaporate while the President distanced himself publicly from the failed project. $TRUMP raises other issues. Friend and foe alike may try to influence the President by lining his digital wallet.
Some have even suggested that Trump really doesn't get or care about blockchain and crypto and is more interested in rewarding campaign supporters, while exploiting an easy opportunity to enrich himself. Reports this week that the Trump family considered investing in Binance, the largest cryptoasset exchange, as its former CEO was negotiating a Presidential pardon, added some fuel to this concern.
I also argued that the fate of crypto is tied to the fate of the U.S. economy and warned that if Trump took steps to destabilize and harm the economy, the market for digital assets would suffer. As they have. He said he would lower inflation and build a thriving economy from day one, but the reality is settling in that a very different future awaits. His on-again, off-again implementation of tariffs and erratic, hard-to-understand actions on the global stage, including threatening to use economic force to annex Canada and refusal to rule out a recession in America, have led to a broad market selloff. Crypto was not immune, with the price of Bitcoin plummeting 30 percent since its January high.
However, this is about more than politics and their impact on the prices of a new asset class. Like the rise of the Internet, PC, and the printing press, today, AI and Crypto are emerging as two of the leading technologies of a new digital age that may define a new era for the Internet, business, society, and the world. Crypto, specifically, is a new medium for money and assets that will do for value what the first era of the internet did for information, disrupting industries like finance and democratizing ownership of assets like no technology before it.
What's more, despite the change of tone at the top, investors have little to show for it so far.
Consider Ethereum and Solana, two blockchain networks that support a diverse ecosystem of applications, from peer-to-peer exchanges to stablecoins to decentralized AI "agents" — software that can perform tasks and do transactions.
The consensus was that the incoming Trump administration would clear the deck for innovators to build new applications and launch products on these networks. Users pay to use the network with the native tokens ETH and SOL. So, the more network activity, the more revenue accrues to token holders. Given these platforms are engineered for real-world use cases, one could argue they should be outperforming. And, for a time, they did. Ethereum and Solana both rallied after Trump's victory but are now more than 25% lower than the day before the election.
Mark Cuban, the outspoken Billionaire investor and Democratic donor, mused during the campaign that the real reason some crypto enthusiasts and leaders in the tech and VC community supported Trump was that they believed his tax cuts, deficit spending plans, and tariffs would drive inflation higher, while his foreign policy would destabilize the global order, increasing risks and dangers to our system, and increasing demand for a store of value like Bitcoin. This always felt a bit cynical. Would VCs and other business leaders really root for instability and chaos? Business can't succeed in a world that is failing. But, then again, perhaps Bitcoin — the only major crypto up big since the election — can.
Perhaps Trump's erratic actions and tariff tantrums will taper off, and crypto assets, with stocks and other financial assets, will recover. Assuming Trump continues to delegate crypto policy to the capable technocrats who are running agencies like the SEC, we could be in for a great year or more. However, those who have worked closely with Trump have often told us that Trump is notoriously mercurial and easily swayed on many issues. We remain cautiously optimistic. But for those who support Trump, because they believe he'll be good for business and, therefore, good for crypto, I can only say: I told you so.
Alex Tapscott is the managing director of the Digital Asset Group, a division of Ninepoint Partners LP. He is also the author of "Web3: Charting the Internet's Next Economic and Cultural Frontier." Sign up for his newsletter, Digital Asset Digest.
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