US-based American Bitcoin Corp. experienced a dramatic collapse on Tuesday, with shares plummeting an eye-watering 75% since their peak following a catastrophic opening on Wall Street. Just one minute after trading commenced at 9:30 AM, the shares had already fallen by 33%. This staggering decline intensified within minutes, with losses accelerating to 42% and eventually surpassing 50% by 9:56 AM, marking a key moment in a troubling trend for the cryptocurrency market.
The collapse of American Bitcoin has become emblematic of a broader crisis within the cryptocurrency sector, particularly concerning ventures linked to the Trump family. Over recent months, the crypto market has seen an overall downturn, estimated at about 25% for major cryptocurrencies like Bitcoin. However, Trump’s family-affiliated projects have been hit even harder. World Liberty Financial, co-founded by President Donald Trump and his sons, has witnessed a 51% drop in its WLFI token since early September, significantly outpacing the declines of Bitcoin and smaller digital assets. Similarly, Alt5 Sigma, a company promoted by Trump’s sons, has seen its value slump approximately 75%, amid mounting legal challenges.
Additionally, niche market tokens, referred to as memecoins, inspired by the president and his wife Melania, have experienced staggering losses of around 90% and 99% respectively since their all-time highs in January. After the sharp downturn on Tuesday, American Bitcoin—co-founded by Eric Trump—attempted a rebound, climbing 11% in premarket trading on Wednesday. However, the overall financial landscape for these projects raises serious questions about the sustainability of Trump-associated ventures in the cryptocurrency space.
The implications of these developments extend beyond mere financial loss. They may tarnish the public image of the Trump family and reflect on the legitimacy of the cryptocurrency market at large. Formerly buoyed by Trump’s endorsement, which contributed to the initial rise of various digital tokens during his administration, the crypto assets now find themselves in a precarious position—a “Trump drag” rather than a “Trump premium.”
Observers like Hilary Allen, a law professor at American University’s Washington College of Law, note that the Trump presidency has had a mixed impact on the legitimacy of these projects. “If the goal was to achieve legitimacy through the Trump family, that’s not helped,” she remarked, highlighting the fragile nature of confidence in both speculative markets and the political figure associated with them.
Despite the turmoil in his ventures, Eric Trump took to social media, attributing American Bitcoin’s woes to the end of a lockup period for shares rather than a broader market decline. He insisted that the company’s fundamentals remain robust and expressed unwavering commitment to leading the industry.
Historically, the crypto market has demonstrated significant volatility, characterized by sharp declines and subsequent recoveries. While American Bitcoin struggled, Bitcoin itself saw a rare uptick, rising around 6% on Tuesday—suggesting the potential for recovery within the broader market even as specific projects falter.
