Financial markets are not purely rational systems; they are narrative-driven ecosystems. This is where Krugman’s thesis has partial merit—not because Trump controls Bitcoin, but because perception of power can influence speculative behavior.
When political leaders signal regulatory leniency, markets often front-run expectations. Conversely, when political authority appears weakened, speculative premiums can evaporate. This phenomenon is not unique to crypto. Equities, commodities, and currencies have long reacted to leadership uncertainty.
However, crypto markets amplify this effect due to their reflexive nature. High leverage, retail participation, and social-media-driven narratives magnify sentiment swings. If traders believe Bitcoin has become aligned with a political faction—even incorrectly—that belief itself can influence short-term price action.
Yet this cuts both ways. Bitcoin has also rallied during periods of political chaos, bank failures, and institutional distrust. The same asset that some frame as a “Trump trade” was previously framed as an “anti-establishment hedge.”
The deeper truth is this: Bitcoin absorbs narratives but is not governed by them. Political symbolism may impact flows temporarily, but it cannot override Bitcoin’s fixed supply, global demand, or censorship resistance.
Markets may react to power, but they eventually revert to fundamentals.$BTC
