“Trump was an amazing catalyst for all of the Trump names,” said Matthew Tuttle, CEO of Tuttle Capital Management. “But what happens is all this stuff becomes a bubble looking for a pin, and eventually, the bubble always finds the pin. These things can’t defy gravity forever.”
The recent declines highlight the shift that has disrupted U.S. financial markets in recent weeks, halting the record highs often celebrated by Trump. For much of the past two years, investors eagerly bet on technology companies, crypto tokens, and so-called memestocks like Trump Media and GameStop, whose shares often fluctuate based on trader enthusiasm. However, amid an uncertain policy and economic climate, investors have started selling assets regardless of their affiliations.
The Magnificent Seven, a group of leading technology stocks including Nvidia, Meta, and Elon Musk’s Tesla, which propelled the S&P 500 to record highs over the last two years, is down 6 percent this year after recently entering correction territory, defined as a drop of 10 percent or more. Bitcoin, the world’s most valuable crypto token, has fallen 23 percent since reaching its all-time high of over $109,000 on Inauguration Day. Additionally, an increasing number of Wall Street veterans are cautioning that the selloff may be just beginning.
“We’re past due for a market-clearing event,” said Julian Klymochko, head of the Calgary-based investment firm Accelerate Financial Technologies, who has closely followed Trump Media’s stock. “There’s a significant amount of excess froth that needs to be worked through.”
Spokespeople for Trump Media and the Trump Organization did not respond to requests for comment. On Tuesday, Eric Trump, the president’s son, posted on X, “Buy the dips!!!” (The post appeared to reference the crypto selloff, as he used the bitcoin symbol for the “B” in “Buy.”)
Despite these challenges, the market’s recent volatility may simply reflect a necessary recalibration that could stabilize soon. Although concerns linger about the potential impact of Trump’s economic policies, including tariffs, on inflation, the Federal Reserve’s preferred inflation measure aligned with expectations when released on Friday, easing some investor concerns. Stocks rallied for the day.
“The stock market’s recent declines are simply garden variety volatility,” said Robert Ruggirello, founder of Brave Eagle Wealth Management. He noted that February is historically volatile for stocks but pointed out January’s gains. “We do not believe that the recent market declines are a sign of some sort of deeper bear market on the horizon.”
According to Forbes, Trump’s estimated net worth is $5.1 billion, with the majority attributed to his real estate business and a large stake in Trump Media. Full transparency into his empire is limited because the Trump Organization is privately held. However, Trump’s stake in Trump Media, a publicly traded company, has dropped from $4.6 billion at his inauguration to $2.8 billion today due to the share-price decline.
Trump Media, majority-owned by Trump, has experienced significant share price fluctuations since its debut last year. The money-losing company’s stock has struggled to regain momentum after peaking at $79.38 last March. (Trump Media shares closed at $24.10 on Friday.)
While volatility is typical for memecoins—a fact acknowledged by Trump’s own Wall Street regulators—the declines in $TRUMP and $MELANIA have unsettled some traders. According to data from crypto analytics firm Chainalysis shared with POLITICO, more than 885,000 crypto wallets have incurred losses trading $TRUMP, while 301,000 have lost money betting on $MELANIA. It’s unclear how many have exited their positions, but Chainalysis found that nearly $2.5 billion in total losses have been recorded by these wallets.
On the other hand, 1.2 million wallets have profited from trading these tokens, with gains exceeding $8 billion, according to Chainalysis. The Trump family and its partners have also earned nearly $350 million worth of crypto through fees generated by memecoin trading and effectively selling some $TRUMP tokens, Chainalysis reported.
For Tuttle, whose firm aims to launch a fund offering double the returns on Trump Media shares, the selloff reflects a new reality in today’s investing landscape. Individual investors, once minor players in trading, have become a significant force since the early days of the COVID-19 pandemic and have shown little hesitation in returning to risky assets after losses.
“They get juiced about stuff and they run things up and then they get their butt kicked—and then they do it again,” Tuttle said. “So the Trump names and all of the retail favorites just ran up massively after the election. All of this stuff just got too ahead of itself.”
— news from POLITICO