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Thursday Nov 27 2025 03:10
1 min
Paul Krugman, Nobel laureate in economics, offers a sharp analysis of the intricate relationship between Bitcoin and politics, particularly the influence of former President Donald Trump. Krugman posits that Bitcoin has evolved beyond being a mere financial asset and is now deeply intertwined with Trump's political fortunes.
Krugman questions Bitcoin's true utility, noting that it doesn't function as a medium of exchange nor does it provide a hedge against inflation or financial risks. Instead, he argues it is primarily used to obscure the flow of funds, facilitating illicit activities and making users vulnerable to crimes like kidnapping.
Krugman asserts that Bitcoin has become a tool for financial predation, being marketed to naive investors who may not understand the risks. He strongly criticizes the Trump administration for undermining institutions established to protect investors after the 2008 financial crisis, creating a favorable environment for financial speculators.
Krugman links Bitcoin's recent price drop to Trump's declining political influence. He points out that Trump is striving to reciprocate the cryptocurrency industry, but his diminishing power affects his efforts. He also mentions Trump's electoral defeats in Virginia and New Jersey, as well as the ongoing scandal regarding his relationship with Jeffrey Epstein, all contributing to his declining popularity.
Krugman concludes that Bitcoin has become a 'Trump trade,' and its decline reflects Trump's waning control over the Republican Party. He promises further analysis of the relationship between politics and cryptocurrencies in the future, emphasizing the interconnectedness of political power and financial markets.
Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients.
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