Macros Dump Crypto Despite Trump Pump💸
Hello dispatchers!
So much happening in crypto, yet nothing to show for. That’s been the story for the past couple of weeks.
Even a president's endorsement of a crypto strategic reserve, announcement of a crypto summit at the White House and a crypto-friendly Securities and Exchange Commission (SEC) couldn’t overcome the pull of economic reality.
It’s been a classic case of “sell the news", albeit with a macroeconomic twist.
The last few weeks have delivered multiple contradictions.
A staggering $3.8 billion exodus from crypto funds in just three weeks
Massive liquidations in the past 24 hours alone
Bitcoin tumbling back below $87,000 despite Trump's "crypto reserve" announcement
SEC dropping lawsuits against Kraken, Yuga Labs, and others with no lasting price impact
In today’s Token Dispatch, we will unwrap what’s strangling crypto's attempt to take off, despite what should be the most favourable political environment in history.
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The Multi-Billion Dollar Exodus
There’s no denying the numbers.
Crypto investment products saw a $3.8-billion exodus over just last three weeks, showed CoinShares' Digital Asset Fund Flows report. The bleeding intensified last week with $2.9 billion withdrawn from digital asset funds – marking the largest weekly outflow on record.
This reversal comes after a 19-week streak of inflows totalling about $29 billion.
Bitcoin has borne the brunt of this negative sentiment.
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In The Numbers 🔢
$2.6 billion
That’s how much Bitcoin products have lost in the past week alone. For context, the figure was $570 million in the preceding week.
Reasons? Many.
CoinShares head of research James Butterfill attributed this dramatic capital flight to "the recent Bybit hack, a more hawkish Federal Reserve, and the preceding 19-week inflow streak."
This still doesn’t explain the market's refusal to respond positively to the bullish political developments that followed these developments more recently.
Trump's Triple Pump
In the last week, Donald Trump and his administration set the stage for crypto's greatest bull run yet, deploying not one but three major market catalysts.
First came Sunday's announcement of a "crypto strategic reserve" on Truth Social. Trump revealed that XRP, Solana, and Cardano would join Bitcoin and Ethereum in the proposed national stockpile.
The initial market reaction was electric. Bitcoin surged from around $85,200 to nearly $95,000. Altcoins named in the announcement saw even more dramatic gains, with ADA temporarily rocketing over 70%. Except that all the gains fizzled out in less than 24 hours.
Meanwhile, the SEC's regulatory cleanup continues at breakneck pace. Yesterday, Kraken announced the SEC had dropped its lawsuit against the exchange "with prejudice" – meaning the case cannot be refiled.
Hours later, Yuga Labs revealed the SEC had closed its investigation into Bored Ape Yacht Club NFTs without taking enforcement action.
These moves follow similar dismissals or closures of cases against Coinbase, Binance, Robinhood, OpenSea, and Uniswap – effectively dismantling most of the Gensler-era enforcement agenda.
Read: Case Closed: SEC’s Crypto Cleanup🧹
Not enough? Then, Trump announced he is set to host the first-ever White House Crypto Summit on March 7, where he'll deliver remarks to cryptocurrency founders, CEOs, and investors.
Despite this trifecta of seemingly bullish developments, crypto markets have descended into a sea of red. The brief "Trump pump" has completely evaporated, with Bitcoin falling below $84,000 – down over 23% from its January peak above $109,000.
Why Sell the News?
The combination of negative price action amid positive political developments reveals a market grappling with deeper concerns that transcend superficial presidential endorsements.
The industry's divided reaction to Trump's crypto reserve announcement offers the first clue.
Read: Crypto Industry’s Not Buying into Trump’s Reserve Plans
Crypto prices surged initially, sure. Not all crypto leaders were happy though. They expressed concern about the inclusion of altcoins alongside Bitcoin.
"I imagined a Strategic Reserve would be just Bitcoin. That makes the most sense to me. Many crypto assets have merits, but what we're talking about here isn't a US investment portfolio — we're talking about a reserve, and Bitcoin is the undisputed store of value for the digital age," wrote Bitwise CEO Hunter Horsley on X.
Coinbase CEO Brian Armstrong also suggested that only Bitcoin should be included. More joined the criticism.
Reason? Centralised control and technological incompatibility to name a few.
"They are very centrally controlled and ownership is also highly concentrated," Two Prime Digital Assets CEO Alexander Blume told The Block.
The selection criteria appeared to mix fundamentals with nationalism.
BTC and ETH were chosen for their decentralisation, while SOL, XRP, and ADA seem to have been included for being "Made in America," leading some to view the announcement as politically motivated rather than economically sound.
Read: Ripple Rides Trump Wave 🌊
The five cryptocurrencies represent a curious mix of assets with vastly different fundamentals, market positions, and industry reception.
The selection has puzzled analysts at Bernstein.
"ETH and SOL are the two most-used blockchain networks, and holding their native assets supports the growth of the industry—but the rationale for a sovereign to hold it in reserve is unclear," they wrote in a note.
Blockchain sleuth ZachXBT noted that neither network has attracted major stablecoin issuers like Circle, Tether, or Paxos.
The disparate price movements since the announcement – with ADA and XRP initially seeing the largest gains before experiencing the steepest drops – also highlight the speculative nature of the market's response rather than a fundamental shift in value proposition.
That’s not all.
The path from announcement to implementation faces significant obstacles.
Investment bank TD Cowen called Trump's announcement "uncoordinated" and noted it "lacks clarity on funding".
Their concern? The Trump government did not explain how it would acquire these assets.
Adding a new asset to the government reserve requires Congressional approval – a far more complex prospect than an executive order.
Even Trump’s party member Wyoming Senator Cynthia Lummis has proposed legislation for a Bitcoin reserve, but her views on including altcoins remain unknown.
Macro Troubles
The most powerful force suppressing crypto prices is coming from outside the ecosystem - macroeconomic concerns.
Trump's plans to implement 25% tariffs on imports from Canada and Mexico starting today have spooked markets across all asset classes.
Benchmark indices S&P 500 closed 1.8% in red and the Nasdaq fell about 2.6% on Monday. AI giant Nvidia closed with an 8.7% slide yesterday.
Manufacturing data released on Monday added to the gloom.
The Institute for Supply Management's Purchasing Manager Index slipped to 50.3 in February, dangerously close to the sub-50 territory that indicates economic contraction.
The Federal Reserve's updated projection that US GDP will shrink by 2.8% by the end of Q1 2025 – a reversal from its prediction just four weeks ago of 3.9% growth adds to the macro-economic woes.
For context, the US economy hasn't experienced such a contraction since the early days of the COVID-19 pandemic.
Token Dispatch View 🔍
The collision between Trumpian crypto optimism and harsh economic reality reveals a fundamental truth about today's market: crypto has become intertwined with traditional finance to dance to its own tune.
The $3.8 billion exodus from crypto funds wasn't triggered by SEC enforcement or regulatory FUD (fear, uncertainty and doubt). The ongoing macroeconomic anxiety driving capital away from equities, tech stocks, and risk assets broadly was the driving force.
It’s important to note how the "Trump pump" has almost been wiped out. The pattern is becoming predictable: presidential announcement, immediate price surge, complete retracement within 24-48 hours. The market is essentially saying that political theatre, however crypto-friendly, cannot overcome fundamental economic headwinds.
When the Fed is projecting a 2.8% GDP contraction and manufacturing indices are teetering on the edge of contraction territory, even presidential endorsements become noise rather than signal.
The strategic reserve announcement exposed another crucial dynamic: crypto's identity crisis.
The industry can't decide what it wants to be. Bitcoin maximalists believe only BTC belongs in a national reserve, while others embrace the inclusion of "American-made" projects regardless of their technical merits. This ideological fracturing weakens the market's ability to rally cohesively around what should be unambiguously positive news.
If the correlation between crypto and traditional markets remains this tight, investors should be watching manufacturing data and GDP projections as closely as they follow SEC announcements or presidential tweets.
The catalysts for crypto's next sustained rally may have less to do with White House summits and more to do with economic fundamentals stabilising.
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