Trump manipulates Bitcoin price via China tariff posts, says Paul Krugman

President Trump's whiplash reversal on China tariffs may have less to do with geopolitics and more to do with his cryptocurrency portfolio, says economist Paul Krugman. On Friday, Trump threatened China with 100 percent tariffs, calling their rare earth export controls a "moral disgrace" and "obviously a plan devised by them years ago." Within 24 hours, he posted on social media that China "just had a bad moment" and praised "highly respected President Xi." What changed?

According to Krugman, the answer lies in the cryptocurrency markets. Bitcoin plunged 20 percent Friday following the tariff announcement. Trump's personal Bitcoin holdings, estimated at $870 million, took a substantial hit alongside the official Trump coin. The timing of his conciliatory tone toward China coincided precisely with these market losses.

"So why did Trump's threat of all-out trade war with China cause crypto prices to plunge?" asks Krugman. "Not because the economic damage from such a war would reduce the use of crypto, because crypto basically doesn't have any legitimate uses. But an intensified trade war, especially a trade war America would almost surely lose, would drive Trump's public support into an even deeper hole. And this would reduce the ability of history's most corrupt administration to keep showering favors on the industry that made Trump rich."

Previously:
• Mysterious $20k Bitcoin transfer to Satoshi Nakamoto's untouched wallet adds to its $117 billion frozen since creator's disappearance in 2011
• HBO Bitcoin documentary claims to unmask Satoshi Nakamoto
• Investors turn to gold, bitcoin, and stocks as protection against currency debasement and ballooning government debt