Author: Penny, BlockBeats
Since former President Trump and his wife released their own Meme coin $TRUMP and $MELANIA, which attracted massive funding, the crypto market has plunged into a state of liquidity shortage in a short period of time. On the other hand, the impact of the domestic AI large model DeepSeek, the cancellation of Bitcoin's legal tender status by sovereign states, and the additional tariffs imposed by the US have further exacerbated the already sluggish market.
The first major drop after the new year was triggered by Trump's additional tariffs.
Are Policies Tied to Crypto Prices? The Highly Sensitive Crypto Market
Trump's tariff policy is severely impacting the market. On February 1, local time, US President Trump signed a tariff order, imposing an additional 25% tariff on imports from Canada and Mexico, and a 10% tariff on energy resources from Canada, effective on the 4th. Additionally, on the 1st, Trump signed an executive order to impose an additional 10% tariff on goods imported from mainland China.
The global risk market reacted quickly, with cryptocurrencies being hit the hardest. On the same day, the price of Bitcoin plummeted from around $105,000, breaching the $100,000 mark, and even briefly fell below $92,000, a drop of over 7% in 24 hours. Ethereum fell by around 25%, to its lowest level since early September last year, and other major cryptocurrencies also experienced double-digit declines, a truly epic crash.
On February 3, Trump said he had reached an agreement with the President of Mexico to immediately suspend the expected tariffs for a month. After the tariff policy was delayed, Bitcoin rebounded to as high as $102,500, Ethereum rebounded to $2,923, and other major coins also rebounded to pre-crash levels.
Jeff Park, Chief Investment Strategist at Bitwise Alpha, said that tariffs may only be a temporary tool, but in the long run, Bitcoin will not only rise, but rise faster, as both sides of the trade imbalance want Bitcoin, so the ultimate result is the same: higher prices and faster speeds.
It can be said that the imposition of tariffs led to a significant drop in global stock markets, and accompanied by other negative news, the crypto market also experienced a decline. The imposition of tariffs is not only a reshaping of the international trade pattern, but also a heavy blow to the confidence of the global financial market. The crypto market, with its emerging, high-risk, high-return and unregulated characteristics, has become one of the most sensitive areas in this storm, further demonstrating the increasingly close connection between the crypto market and global macroeconomic policies.
Launching Meme Coins to Bleed the Market
On January 18, 2025, Trump announced the launch of his personal Meme coin $TRUMP on his social media account. Within just 12 hours of its launch, the coin surged over 15,000%, reaching around $30, with a peak market cap exceeding $80 billion. This astonishing price surge and massive market cap quickly attracted a large influx of funds, with many investors who originally invested in mainstream cryptocurrencies like BTC and ETH, selling their other holdings to go "All In" on $TRUMP. Except for SOL, other cryptocurrencies were heavily drained in the short term, and other meme coins and AI Agent tokens across the board experienced significant declines.
Furthermore, the $TRUMP issuance team holds as much as 80% of the locked-up coins, meaning they have extremely strong control over the coin's price. After the lock-up period gradually unlocks in the future, whether they directly dump the coins on exchanges or do staking on DeFi chains, it is likely to have a huge impact on the market. This behavior will also further disrupt the market order in the crypto world, making it more difficult for other truly valuable crypto projects to obtain funding support, leading to an imbalance in the entire crypto ecosystem.
The bleeding effect brought by Trump's coin issuance not only led to an unreasonable flow of funds in the crypto market in the short term, 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 the thriving DeSci, DeFAI and AI Agent sectors. And according to the crypto world's consistent pattern of chasing new projects over old ones, these sectors will undoubtedly need greater driving force to regain their former glory, leaving the crypto world facing more uncertainty and risk.
Arthur Hayes, co-founder and chief information officer of BitMEX, believes that the complete diluted valuation (FDV) of $TRUMP reaching nearly $100 billion in 24 hours is an absolutely absurd market signal, similar to FTX's purchase of MLB umpire advertising in the 2021 bull market - it symbolizes the approaching market top.
Dumping and Then Shilling, the Confusing Behavior of WLFI
Arkham data shows that World Liberty Financial (WLFI) conducted a large-scale crypto asset transfer on the evening of February 3, with its ETH holdings dropping from around 66k on February 2 to 52, almost completely clearing its ETH assets, mainly flowing into Coinbase Prime deposit addresses.
And at this sensitive time of asset transfer, Trump's son Eric Trump posted on his social media platform that now is the best time to add ETH (In my opinion, it's a great time to add ETH). The original version of the tweet also had a sentence "You can thank me later".
The community expressed doubts about this, with some observant investors noting that the ETH holdings dropped from 66k to 66, only one unit less, obviously trying to avoid being discovered in the asset transfer, and suspected a conspiracy to "harvest the leeks". WLFI's explanation is that these measures are aimed at maintaining a strong, secure and efficient financial system, just reallocating assets for normal business purposes, and they will not sell the tokens. But once the funds are transferred to Coinbase Prime, we don't know what they will be used for, and investors can only analyze based on the price fluctuations and WLFI's subsequent asset operations.
Interestingly, on the morning of February 6, Eric again publicly shilled BTC, and also mentioned the family project WLFI, with the community joking "Is it time to sell BTC now?". Perhaps this is just a pre-dump shill, or to boost confidence that was dampened by the tariffs, or just routine promotion of the family project, after all, shilling and FUD are the norm for these people.
Crypto Tsar, but also a Crypto Harvester?
David Sacks, the chairman of the Crypto Council, is well known as one of the founders of PayPal, and later became famous for creating Yammer and selling it to Microsoft for $1.2 billion. In the crypto world, David Sacks' most important identity is as an investor in the crypto VC firm Multicoin, and a staunch supporter of Solana, known as the "Crypto Tsar".
Since $TRUMP was deployed on the Solana chain, and David Sacks remained silent on these "zero-sum meme coins" when Trump issued $TRUMP, many believe that the chairman of the Crypto Council must have been involved.
Another piece of evidence is that David Sacks has a "criminal record". In March 2024, David Sacks posted about his own memecoin $Sacks.
Although he tweeted nine times telling people not to buy it when people started buying, this has already established the evidence that he "once issued a coin", which is exactly the same as the method of issuing $TRUMP. (According to feedback from community members, David Sacks has recently deleted his posts about $Sacks.)
This has caused many people to start disliking David Sacks, feeling that his methods are too eager for quick success and too eager to seek benefits through this radical approach. Even if Sacks did not directly participate in it, as the chairman of the Crypto Council, he should also be held responsible for this incident. There are even rumors that some people have proposed that the entire leadership team of David Sacks' Crypto Council should be replaced with a new one.
On February 5, David Sacks reiterated his work goals of "clearly defining the crypto regulatory framework", "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 mentioning the establishment of a Bitcoin reserve, David Sacks also used the word "evaluate", which is a relatively mild affirmation (previously, the US government would use the word "evaluate" when it had to deal with the issue but did not want to really solve it). Affected by the fact that the press conference "did not release any positive news", Bitcoin fell back and fell below $99,000, with a low of $96,147.
Is it a true builder, or an even bigger sickle?
Looking back on Trump's behavior over the years, his attitude towards cryptocurrencies has changed very obviously. During his previous term, he publicly stated that cryptocurrencies such as Bitcoin are a "scam", but now he has promised to make the United States the global "cryptocurrency capital" and "Bitcoin superpower", and 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 enterprises.
There may be multiple reasons behind Trump's change of attitude. On the one hand, the cryptocurrency market has developed rapidly in recent years, with a huge investor base and huge economic influence, and courting this force can help increase his political support; on the other hand, the cryptocurrency industry has a powerful interest group behind it, and these groups may influence Trump through political donations and other means to promote policies that are favorable to the development of cryptocurrencies. In addition, Bitcoin can be seen as a tool to hedge against the shaking of the US dollar's status, and Trump's 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 are implemented, Trump's every move is gradually becoming a wind vane for the hot topics in the crypto circle. In particular, before taking office, Trump issued his own Meme coin, which caused countless investors both inside and outside the circle to go crazy, creating many phenomenal wealth myths, and it was thought that this was the beginning of the bull market, but the subsequent issuance of the $MELANIA token shattered this illusion, making the market calm down and doubt the purpose of his token issuance. The previously thriving AI Agent has been heavily bled by $TRUMP and $MELANIA, and has also been hit by deepseek, remaining sluggish. Although the frenzy of Meme is still continuing, the peak market value of a large number of tokens is constantly shrinking, and the time to zero is constantly shortening, and the mainstream coins continue to fall after the frenzy, we can't help but think, is Trump's pro-crypto purpose really to be a builder, or to maximize the interests of his interest group and the hegemony of the United States during his term, to fish the pond dry, and finally leave a scattered mess?
In the short term, the market will inevitably experience a surge and a plunge to digest various major moves, but the long-term value growth and industry precipitation requires not only policy incentives, but also a two-way game between the market and politicians. From his series of promises and statements, it seems that he has a positive and supportive attitude towards cryptocurrencies. However, the huge change in his past statements and positions makes it difficult to be fully 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, will the promised positive policies really be implemented, or is it all just a surface act to gain political interests? These questions are full of uncertainty.
For crypto investors, Trump's current attitude and policy direction is like a double-edged sword. If he can really fulfill his promises and create a relaxed and friendly development environment for cryptocurrencies, then the crypto circle may usher in a new round of prosperity; but Trump's frequent sanctions on other countries after taking office, the businessman style that has been criticized by himself and his family members, and the contradictions and divisions within his team, will all exacerbate the instability of the global economy and politics, making his crypto policies unpredictable, and this instability will cause panic sentiment to spread among investors, which will have a negative impact on the cryptocurrency market.
It can be said that Trump's imposition of tariffs is just the beginning of his impact on the crypto circle after taking office. In the future, as he pushes forward and implements policies in areas such as economy and diplomacy, the crypto circle will most likely face even more violent fluctuations. Investors in such an environment need to closely follow policy dynamics and make investment decisions more cautiously.
The bigger the waves, the bigger the fish. Regardless of the unknown ahead, this crypto ship has set sail and is ready to face the stormy waves.
