Did Trump Just Pull Off The Biggest Pump-And-Dump Of All Time?

On Sunday 2 March, President Trump’s announcement of a US crypto reserve saw the price of several cryptocurrencies surge. Yet the same assets severely drooped from their peaks only a day later, recording double-digit losses – a pattern similar to a pump-and-dump manipulation scheme.

Trump said his reserve would hold XRP, Cardano (ADA), and Solana (SOL). Later that day, he added Bitcoin (BTC) and Ethereum (ETH) to his list. His announcement caused crypto prices to spike within hours. XRP jumped from $2.23 to $3.10, SOL climbed from $140 to $168, and ADA rose from $0.68 to $0.14.

Bitcoin increased by 9% to reach $93,000, while Ethereum hit $2,500. In a very short time, the total market value of cryptocurrencies grew by billions.

However, enthusiasm soon faded. By Monday afternoon, many gains vanished. Bitcoin dropped below $84,000 after peaking near $95,000 on Sunday. Ethereum fell by 15% to about $2,100. SOL and ADA lost most of their gains. Retail investors who bought at the peak now face heavy losses.

This is very similar to a pump-and-dump scheme or even a rug pull, which you’d often see with meme coins or lower market-cap cryptocurrencies. So, did the president’s crypto reserve announcement hide one of the most sinister schemes ever in the industry?

Allegations of a rug pull and insider trading

Critics quickly raised concerns about Trump’s move. Economist Peter Schiff called the reserve a “crypto pump and dump”. Schiff accused Trump of a deliberate act to create a pump-and-dump scheme. He claims that insiders with early access took advantage of the price surge.

Schiff demands Congress investigate who wrote the posts, who knew of them in advance, and who profited from the early buys. He calls for a review of emails and texts among Trump’s staff, family, and campaign donors.

However, it’s important to know that Schiff is not exactly an influential figure in crypto. He has been a constant opponent and critic of the industry.

Regardless, the allegations of insider trading might have some credible grounds. One particular trader used 50x leverage to open a $200million long position on Bitcoin using $4m in collateral right before Trump’s announcement.

A long position means buying an asset, like Bitcoin, expecting its price to rise. In this case, the trader used 50x leverage to open a very large trade with only $4m of their own money. The trade was risky, as a $50 drop from the entry price would have triggered liquidation. After the announcement, the trader made about $6.8m in profit.

This situation raises concerns about insider trading because a well-timed large trade with high leverage suggests that the trader may have known about the announcement in advance and took a position to profit from the expected market rally.

Mixed reactions from crypto leaders

Many crypto enthusiasts had hoped for a reserve focused solely on Bitcoin. Bitcoin is seen as a safe digital asset similar to gold. Coinbase CEO Brian Armstrong said Bitcoin offers a “clear story as a successor to gold”.

Instead, Trump chose to include smaller tokens like Solana, Cardano, and XRP. Critics say this choice exposes taxpayers to assets that carry higher risk. Supporters, however, defend the move as a way to boost the overall digital asset sector.

Trump’s actions come amid broader policy changes. He signed an executive order on digital assets and created a working group to study new crypto rules. He also pardoned Ross Ulbricht, the Silk Road founder, and helped drop a long-standing probe into Coinbase.

These steps pleased many in the crypto community. Yet, the next move raised a fresh alarm. The timing of the posts and the market reaction suggest a link between political power and market manipulation.

Economic tensions add to the volatility

Trade tensions also added pressure to the market. Canada imposed a 25% tariff on $20.8bn of US imports. China blacklisted 25 US firms and set new tariffs on American agricultural products.

These measures increased uncertainty. Investors rushed to sell off risky assets. Bitcoin dropped sharply after a $10,000 loss in 24 hours. The overall market value of digital currencies fell by 12% as investors moved to safer assets like gold. Gold, seen as a safe haven, gained 10% year-to-date.

The reserve plan has sparked debates over ethical issues. Some lawmakers argue that public officials must not use their positions for personal gain. They claim that political figures should not influence financial markets without proper checks.

If the investigation confirms insider trading, new laws may come into play. The controversy also deepens the debate over the proper role of government in financial markets. Critics see the incident as a dangerous blend of politics and finance that undermines public trust.

US crypto reserve is a long way from becoming a reality

While the executive order sets the framework, the government’s actual purchase of cryptocurrencies requires funding, which must go through Congress. The approval process will involve:

Budget proposal & appropriations process

• The White House must submit a budget request that includes the required funds for purchasing crypto assets.
• The request will go to the House Appropriations Committee, which will determine if the government can allocate funds to acquire Bitcoin, Ethereum, and other listed cryptocurrencies.
• If approved, it moves to House and Senate votes before being included in the final federal budget.

Potential bipartisan debate & political hurdles

• Republicans control Congress, but support for the crypto reserve is not guaranteed.
• Some Democrats may oppose using taxpayer funds for crypto purchases, while Republican fiscal conservatives may question the impact on federal spending.
• If Congress approves funding and passes enabling legislation, the Treasury Department or a new government entity will manage the crypto purchases.

The key aspect is that there’s a long way to go before Trump’s executive order becomes law.

Final thoughts

The incident casts a long shadow over Trump’s promise to make the US the “crypto capital of the world”. The initial boost in crypto prices quickly turned into a sharp reversal. Many investors now face losses after a rapid surge and fall. The controversy may lead to new regulatory policies that restrict political influence on digital asset markets.

With a White House Crypto Summit scheduled for 7 March, further details about the reserve are expected. Investors and lawmakers will watch closely to see if additional tokens are added and how the reserve is funded.