U.S. economist and Nobel laureate Paul Krugman has intensified his criticism of bitcoin ( BTC), claiming that the cryptocurrency’s recent price action, including its tumble to $80,500 on Nov 21, has turned it into a “[U.S. President Donald] Trump trade.” He suggests that this decline reflects the U.S. leader’s diminishing dominance over the Republican party.

Krugman, a long-time critic of the Trump administration, previously slammed the then-presidential aspirant’s support for the “economically useless” bitcoin. He also questioned the large technology firms’ donations that aided pro-crypto candidates in their successful 2024 U.S. election campaigns.

Read more: Nobel Laureate Paul Krugman Says Bitcoin Is ‘Economically Useless’ — Criticizes Trump’s Crypto Support

Since winning the presidency and gaining control of Congress, the Republican Party has successfully pushed through pro-crypto legislation, and the White House has reversed controversial orders from the previous administration that targeted the crypto industry. These political acts were widely credited with helping move BTC into the mainstream and fueling its surge to a new all-time high in October.

However, since reaching its peak of just over $126,000, the top cryptocurrency declined significantly, trading at one point 35% below that peak. Although it has since pared some losses, bitcoin’s percentage gains for the year were near zero at the time of writing. Despite this, many pro- BTC experts continue to project a rally, anticipating the cryptocurrency will reclaim prices above $100,000 before the year ends.

Interestingly, in a blog post on Nov. 24, Krugman conceded that BTC is likely to rebound but attributes this potential recovery not to fundamentals, but to its “cultism.” He claims this cult status has allowed the cryptocurrency to “recover from setbacks and scandals that would have sunk any normal investment.”

Krugman further argues that BTC is fundamentally a tool used by what he terms “financial predators” who are taking advantage of the Trump administration’s pro-crypto posture. He cited a specific example: “More broadly, crypto is, as I’ve suggested, increasingly a tool for financial predators, and the Trump administration is extremely predator-friendly. Ask Changpeng Zhao, founder of the cryptocurrency exchange Binance, who was found guilty of violating U.S. money-laundering laws — then pardoned by Trump,” he wrote.

Still, the economist asserts that as Trump’s political power is “visibly diminishing,” evidenced by “blowout Democratic victories” in Virginia and New Jersey on Nov. 4 and this curtails his ability to continue promoting crypto.

• Why does Paul Krugman call bitcoin a “Trump trade”? He links BTC’s decline to Trump’s weakening influence in U.S. politics.
• How has bitcoin performed recently? BTC fell from $126,000 to $80,500, erasing most of its yearly gains.
• Does Krugman expect bitcoin to recover? Yes, but he attributes any rebound to “cultism,” not fundamentals.
• What political factors are shaping BTC in the U.S.? Pro-crypto laws and Trump’s support boosted adoption, but his fading power may limit momentum.

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