Is the Trump-Fueled Crypto Mania Dying Down?

Key Points

• The Trump administration is affecting the crypto sector in quite a few ways.

• The president's official token has hurt the sector.

• The newly proposed policies and newly appointed leaders could be positives.

• 10 stocks we like better than Official Trump ›

President Donald Trump didn't invent speculative exuberance, but he has a knack for bottling it. In mid-January, the Official Trump (CRYPTO: TRUMP) meme coin debuted with fireworks on Solana, very briefly driving the entire meme coin complex higher and padding early buyers' wallets before collapsing and inflicting dramatic losses. Even sober observers had to concede that the president knows how to move markets.

Yet euphoria can often wither quickly in crypto. To some, today the cup feels half empty, and it's natural for investors to be wondering whether the Trump-powered party is winding down or just taking a breather. Let's take a look at the evidence here.

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The president's token was not a good investment

With the Official Trump meme coin, enthusiasm met gravity in record time, and there was plenty of fallout as a result.

By Feb. 3, the token had surrendered roughly 75% of its peak value amid significant insider selling despite the president's cheerleading on social media. A broader February slide wiped almost $1 trillion off aggregate crypto market caps, erasing most of the post-election bump.

Some seasoned crypto investors attributed this dip to the lost capital that the president's coin extracted from the ecosystem, since it also may have discouraged new investors from participating immediately after their entry to buy the president's token.

Even now, the Trump coin still has a $1.9 billion market cap, with 80% of its circulating supply controlled by accounts linked to the Trump family and a single allied firm. Concentration that steep limits the token's natural public float and makes every incremental seller more painful for newcomers.

Volume tells the same story. Spikes align with promotional events featuring the token, like the president's dinner raffles, but fall off quickly, signaling speculative rather than sticky demand.

If you arrived late, you're effectively wagering that fresh money will underwrite insiders' paper gains. That is possible, but not exactly a margin of safety or the basis for a sound investment thesis.

The carnival is still very much in town

Before writing the post-mortem on the crypto market run, recall that presidents wield policy levers, not just Twitter flair.

On March 6, Trump signed an executive order mandating the creation of a Strategic Bitcoin Reserve (SBR) as well as a Digital Asset Repository, instructing the U.S. Treasury to hang on to seized crypto rather than auction it. Though these two stockpiles have not yet been implemented, the order theoretically turns the government into a structural non-seller, tightening supply for Bitcoin and other major cryptocurrencies.

Regulatory tone is changing as well thanks to the administration's appointments of senior leaders.

Paul Atkins, a longtime critic of financial regulation enforcement, now chairs the Securities and Exchange Commission and has already reassigned several enforcement lawyers away from crypto probes while floating various exemptions for decentralized finance (DeFi) platforms. A friendlier set of rules tends to invite bigger pools of capital to the markets.

On that note, Bitcoin notched a fresh all-time high of $123,000 on July 14. That move has more than a few causes, but recent regulatory changes are doubtlessly part of the story.

Meanwhile, Trump-controlled enterprises keep inventing fresh crypto on-ramps. For example, World Liberty Financial's dollar-pegged stablecoin and forthcoming governance token have already raised more than $550 million.

During the week of July 11, a company from the United Arab Emirates injected another $100 million into the platform, elevating a project entwined with presidential branding, and raising numerous unanswered questions regarding the high likelihood of conflicts of interest. Regardless of one's view on the propriety of foreign businesses investing in ventures that the president has a direct financial interest in, those funds are real bids that lift valuations across adjacent tokens.

Add in the White House's June 30 crypto summit and appointment of a dedicated crypto czar, and it's hard to argue the administration is backing away from the sector.

So, is the crypto mania dying? Nope. It's actually picking up after a lull.

Price charts of Trump-related coins say enthusiasm cooled, but policy and capital flows suggest the broader Trump-crypto axis still has horsepower, and that the president's impact on the market is far wider than his impact on his branded tokens.

Long-term investors should separate the noise of meme token gyrations from the signal of structural supply constraints and increasingly dovish regulators. Assuming Washington follows through on developing sound custody rules and with its reserve accumulation plans, crypto's rise will persist well beyond this news cycle -- though it is unlikely that the Official Trump tokens will ever keep pace with the sector's flagship assets.

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Alex Carchidi has positions in Bitcoin and Solana. The Motley Fool has positions in and recommends Bitcoin and Solana. The Motley Fool has a disclosure policy.