Cryptocurrency Fever Under Trump's Influence: From Euphoria to Global Financial Threat

When this summer a group of corporate executives presented Anthony Scaramucci with their business plan, everything seemed simple. The influential investor and former presidential advisor was supposed to help three companies implement a common strategy: accumulating massive amounts of cryptocurrencies to increase their attractiveness to investors. “Everyone was very motivated,” – recalls Scaramucci. However, autumn brought sharp disappointment. The cryptocurrency market crashed, and the stocks of the companies he was involved with fell by 80 percent. This was the first signal of the dramatic game that unfolded in financial markets during the Trump administration.

How the crypto president turned a niche industry into a global power

Now Trump positions himself as the “first cryptocurrency president.” His administration not only stopped regulatory pressure on companies but also actively promoted cryptocurrency investments from the White House. The president approved laws that fostered industry development and also issued his own meme coin TRUMP, elevating the already small industry to the top of the global economy.

The consequences of this policy are growing exponentially. Over 250 companies have emerged since the beginning of the year, starting to accumulate digital assets as their main strategy. More than half of these companies specialize in accumulating Bitcoin – the most recognized cryptocurrency, while dozens others announced plans to acquire less popular coins, including Dogecoin.

The mechanism is very straightforward: managers take a little-known public company (often a toy manufacturer), persuade it to change its profile to cryptocurrency accumulation, then raise hundreds of millions of dollars from wealthy investors and buy digital assets. The goal is to create traditional stocks linked to cryptocurrency prices to allow more people to invest in this volatile market.

Who really profits: the Trump family empire

It is worth noting how new companies intertwine with the growing crypto empire of the Trump family, blurring the lines between business and government. Last summer, the leadership of World Liberty Financial – a Trump crypto startup – announced joining the board of directors of the public company ALT5 Sigma. This company, which previously dealt with recycling, now plans to raise $1.5 billion to enter the cryptocurrency market.

According to the revenue-sharing contract published on the World Liberty Financial website, every time a WLFI token transaction occurs, the Trump family’s business structures receive a commission. However, ALT5 Sigma’s situation quickly worsened. In August, the company discovered that one of its subsidiary directors had been convicted of money laundering in Rwanda. Soon after, the company’s shares fell by 85 percent.

Margin of death: when delverage becomes a systemic threat

Much more serious is the fact that new initiatives have deeply intertwined the cryptocurrency market with the traditional financial sector. In a crisis, the risk could spread throughout the entire financial system, triggering a chain reaction.

The cryptocurrency gold rush literally means a debt fever. By autumn, public companies were massively borrowing money to buy cryptocurrencies. The value of open positions in crypto futures contracts exceeded $200 billion, most of which are based on financial delverage – a tool that can generate huge profits but also carries the risk of liquidation.

One of the leading asset managers from Miami, Allan Thea, invested $2.5 million in Forward Industries, which placed all its bets on SOL tokens. In September, the stock rose to nearly $40 per share. Thea, like thousands of others, believed the strategy was foolproof. “Everyone thought it was an inevitable success,” – he recalls. But when the crypto market fell, Forward Industries’ shares plummeted to $7. Allan Thea lost about $1.5 million, and his question – “How big will the final loss be?” – expresses the concern of millions of other investors.

Horrible day when the stock market crash became a reality

October nights this year shook the crypto world. On October 10, Bitcoin, Ethereum, and a dozen other cryptocurrencies’ prices plummeted sharply, causing a so-called flash crash. Although the immediate cause was geopolitical – Trump’s announcement of new tariffs on China – the real culprit was the huge sums raised through financial delverage.

According to Galaxy Research, in the third quarter, the global value of crypto loans increased by $20 billion, reaching a record $74 billion. Previously, the riskiest delverage operations mainly took place on foreign markets. But this changed when the US allowed local platforms to offer trading with 10x delverage.

During the October crash, positions worth at least $19 billion were liquidated on global platforms, affecting 1.6 million investors. Platforms relied on automated liquidation, but technical failures prevented many users from closing their positions in time. Derek Barton from Tennessee lost about $50,000 because he couldn’t access his account during the crash.

Regulatory theater: how the SEC plays in crypto

As the crisis deepened, regulators found themselves in a strange position. Earlier this year, the SEC formed a special crypto task force that held dozens of meetings with companies seeking regulatory support or approval to launch new products.

Meanwhile, industry leaders argued that these innovations demonstrate the potential of technology to transform the outdated financial system. “High risk is often accompanied by high returns,” – said one executive. However, regulators proved less optimistic. When the commission considered the expansion of the crypto treasury, SEC Chairman Paul Atkins stated: “We are very concerned about this. We are closely monitoring the situation.”

Tokenization: the next frontier of risk

But the ambitions of crypto leaders do not stop at accumulation. The entire sector is now pressing regulators for permission to tokenize – creating digital tokens linked to real assets, from stocks to oil wells.

One summer evening this year, entrepreneurs Chris Yin and Teddy Pornprinya appeared at the Kennedy Center in Washington for a gala event. They promoted their startup Plume, which aims to expand cryptocurrency technology into the broader financial sector. They met with US Vice President JD Vance, Treasury Secretary Scott Bessent, and even Trump.

The idea of Plume is simple: allow clients to buy tokens linked to real assets, trading them like cryptocurrencies. This is already practiced abroad, but in the US, it is in a legal gray area. Decades-old securities laws impose strict requirements on issuing shares in various assets.

Federal economists warned that tokenization could transfer risk from the crypto market to the entire financial system. However, SEC Chairman Paul Atkins called tokenized stocks a “technological breakthrough” and expressed willingness to provide regulatory support.

Moment of truth: when speculation becomes a systemic risk

“Today, the boundaries between speculation, gambling, and investing are becoming increasingly blurred,” – said Timothy Massad, former assistant secretary for financial stability at the US Treasury after the 2008 financial crisis. “This worries me a lot.”

The thing is, a stock market crash would have been just a capitalist market frenzy if the bets were only on risky investors who knew what they were getting into. Instead, the deep integration of the crypto market with the traditional financial system creates a scenario where the October crash could be just a warning of a much greater disaster.

The White House argues that Trump’s policy “by promoting innovation and creating economic opportunities for all Americans helps make the US a global center for cryptocurrencies.” But experts warn that with the next downturn, systemic risk could become unavoidable.