The crypto market, due to its emerging, high-risk, high-return and unregulated nature, has become one of the most sensitive areas in the tariff storm.
Author: Penny
Source: BlockBeats
Since former President Trump and his wife released their own Meme coin $Trump and $MELANIA, which attracted huge amounts of capital, the crypto market has quickly fallen into a state of liquidity shortage. 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 tariff hike.
Are Policies Tied to Crypto Prices? The Highly Sensitive Crypto Market
Trump's tariff policy is severely impacting the market. On February 1, 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, 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 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%, reaching 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.
Bitwise Alpha's chief strategist Jeff Park said that tariffs may only be a temporary tool, but in the long run, Bitcoin will not only rise, but rise faster, because 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 has led to a sharp decline in global stock markets, and accompanied by other negative news, the crypto market has 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 nature, has become one of the most sensitive areas in this storm, further proving 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 on his social media account the launch of his personal Meme coin $TRUMP. Within just 12 hours of its launch, the coin surged over 15,000%, reaching around $30, with a peak market cap exceeding $800 billion. This astonishing surge and massive market cap quickly attracted a flood of capital, with many investors who originally invested in mainstream cryptocurrencies like Bitcoin and Ethereum, selling off their other holdings to go "All In" on $TRUMP, causing a short-term bloodbath in other coins except SOL, while other Meme coins and AI Agent tokens plummeted across the board.
Furthermore, the $TRUMP issuance team holds a staggering 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 it's directly dumping on exchanges or doing staking on DeFi chains, it could have a huge impact on the market. This behavior will also further disrupt the market order in the crypto world, making it harder for other truly valuable crypto projects to get funding support, causing an imbalance in the entire crypto ecosystem.
The bleeding effect brought by Trump's coin issuance has not only led to an unreasonable flow of funds in the crypto market in the short term, but has also had a serious negative impact on the development of other cryptocurrency projects and the stability of the market, putting the thriving DeSci, DeFAI and AI Agent sectors on pause. And according to the crypto world's consistent pattern of chasing new projects over old ones, these sectors will need even greater momentum to regain their former glory, leaving the crypto world facing more uncertainty and risk.
BitMEX co-founder and CIO Arthur Hayes believes that $TRUMP reaching a fully diluted valuation (FDV) of nearly $1 trillion in 24 hours is an absolutely absurd market signal, similar to the FTX purchase of MLB umpire ads during the 2021 bull market - it symbolizes the approaching market top.
Dumping and Then Shilling, WLFI's Confusing Behavior
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 just 52, almost completely clearing its ETH assets, which mainly flowed into a Coinbase Prime deposit address.
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, clearly trying to avoid being discovered in the asset transfer, and suspected a conspiracy to fleece the investors. WLFI explained that these measures were aimed at maintaining a strong, secure and efficient financial system, just reallocating assets for normal business purposes, and not selling 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 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 Bitcoin now?". Perhaps this is just a pre-dump shill, perhaps to boost confidence depressed by the tariff, or perhaps just routine promotion of the family project, after all shilling and FUD are the norm for these people.
The Crypto Czar, But Also the Crypto Big Dipper?
David Sacks, the chairman of the Crypto Council, is known as one of the co-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, earning him the title of "Crypto Czar".
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 to some extent.
Another piece of evidence is that David Sacks has a "criminal record". In March 2024, David Sacks had posted about his own Memecoin $Sacks.
Although he tweeted nine times telling people not to buy when they started buying, this has solidified the evidence that he "once issued a coin", which is exactly the same as the method of issuing the $TRUMP coin. (According to feedback from community members, David Sacks has recently deleted his own 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 such radical means. Even if Sacks was not directly involved, as the chairman of the Crypto Council, he should also be held responsible for this incident. There are even rumors that someone has 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 am 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 light affirmation (previously, the US government would use the word "evaluate" to play a balancing act 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 broke below $99,000, with a low of $96,147.
Is he a true Builder, or a bigger sickle?
Looking back on Trump's behavior over the years, his attitude towards cryptocurrencies has changed very obviously. During his last term, he publicly stated that cryptocurrencies like Bitcoin are a "scam", but now he has promised to make the US the global "cryptocurrency capital" and "Bitcoin superpower", set up 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 implement 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 US dollar's hegemony.
With the election results in place, Trump's every move is gradually becoming a wind vane for the hot topics in the crypto circle. Especially before taking office, Trump issued his own Meme coin, which caused countless investors inside and outside the circle to go crazy, creating many phenomenal get-rich-quick 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 suspect the purpose of his coin 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 US hegemony during his term, to fish the pond dry, and finally leave a scattering?
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 bonuses, but also a two-way game between the market and politicians. From his series of promises and statements, he seems to have 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 US a paradise for cryptocurrencies? After taking office, whether the promised positive policies can be implemented or whether all this is just a surface act for 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, 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 of himself and his family members that has been criticized, and the contradictions and divisions within his team, etc., will also exacerbate the instability of the global economy and politics, making his crypto policy unpredictable, and this instability will cause panic sentiment to spread among investors, which will have a negative impact on the crypto market.
It can be said that Trump's tariff hikes are 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 is likely to face even more violent fluctuations. Investors in such an environment need to closely monitor 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.
