Trump’s Crypto Bailout Is Even Dumber than It Looks

By Jacob Weindling  |  March 3, 2025 | 2:26pm
Photo by Anna Moneymaker/Getty Images
Economy Crypto
Trump’s Crypto Bailout Is Even Dumber than It Looks

On Sunday, Donald Trump announced a “U.S. Crypto Reserve,” where the government would be holding a handful of shitcoins (he had previously said the U.S. would have Bitcoin reserve too). The crypto market, which has pulled back a bit from its highs in January, went absolutely bonkers on the news yesterday. One would think that if this reserve were a real effort to invest in the industry, the momentum would continue today, or at least the market would be flat as participants wait to see what happens next, but nope. It’s nuke city across the board in crypto as of this writing.

While it is easy to dismiss all of crypto as one giant Ponzi scheme, and to a large degree that is true, crypto has been around long enough that it has developed its own idiosyncrasies. Not all crypto is created equal, and while there are very little actual use cases in the real world for this stuff beyond Bitcoin and stablecoins (which are their own byzantine maze of corruption), some cryptocurrencies are worse than others. Much, much worse. Orders of magnitude beyond what the human mind can even comprehend.

For example, Ethereum is the second-largest crypto behind Bitcoin, and the two of them do exist, like, in the world. Bitcoin, launched as an attack on Wall Street, has been adopted by Wall Street as the Bitcoin ETF IBIT finished third in total inflows behind two S&P funds last year, with $34.8 billion invested in the digital challenger to gold’s throne. Ethereum has roughly 500 thousand active addresses, as it has been the development ground for financial technology that the St. Louis Fed has said some complementary things about. Sure, it’s pretty much all crypto natives using things like DeFi whose largest innovation was speedrunning the 2008 Great Financial Crisis for crypto in 2022, but the point is that people actually use Bitcoin and Ethereum.

What makes this bailout, and it’s a bailout, so especially odious are the three cryptocurrencies that Trump put at the forefront of this announcement: SOL, ADA and XRP. Anyone who has been in crypto since the 2017 bull run or earlier has learned the blatantly obvious tell that leading with these three reveals, and it’s not a good one. Even the crypto bros know it.

SOL, also known as Solana, is the source of all those ridiculous shitcoins you have been hearing about the past couple years, like Elizabath Whoren and Fartcoin. It is what this meme casino runs on, and it has exploded in popularity since FTX nearly killed it when their Ponzi was revealed by LUNA’s Ponzi in 2022. It’s here because it’s the newest chain targeted at the public, and in large part because it’s the favored platform of Trump’s crypto czar and Solana shill, David Sacks.

The Dumbest Bullshit in Crypto

So that’s it for the recap of the three blockchains that people actually use to any meaningful degree. Let’s get to the really cynical stuff. XRP, also known as Ripple, is run by Brad Garlinghouse, a former Senior Advisor at Silver Lake Partners, a Silicon Valley private equity firm with an AUM of $103 billion. He joined Ripple as COO in April 2015, and became CEO a little over eighteen months later.

Ripple is a payments protocol that has promoted itself as a replacement for the Society for Worldwide Interbank Financial Telecommunication (Swift), a Belgian cooperative for facilitating global payments created as an alternative to Telex over concerns raised by First National City Bank (FNCB, now Citibank). FNCB created MARTI to try to funnel the global payments network into a private space to profit off it, and the architects of Swift saw the danger in this scheme. This is a tale we have lived before, but like all things in our modern era, it’s a vastly more idiotic version. Everyone who trades crypto has lost money on XRP at some point, as we have all fallen prey to the immense marketing scheme Ripple has built for itself while fending off lawsuits from the SEC.

All the while, not a single human in history has ever regularly used Ripple outside of Brad Garlinghouse’s office making large XRP transfers to what I’m sure are entities definitely not connected to Brad Garlinghouse. Ripple is the 3rd largest crypto with a $151 billion market cap as of this writing, and its main use case is being one of the logos next to all the YouTube scammer title photos where the guy pretending to understand markets has their mouth agape, shocked that their plan to margin trade the most volatile assets on earth tanked their net worth yet again.

Another one of those coins in those awful YouTube title photos is even more pathetic than Ripple, and it’s the third in Trump’s holy trinity of crypto bullshit pointed directly at the uninformed public walking into the casino for the first time. ADA, also known as Cardano, was “built” by one of the five original Ethereum founders, Charles Hoskinson. Being a co-founder of Ethereum is a great selling point, and hoo boy has Charles sold the hell out of it.

Ever since Hoskinson left Ethereum, ADA bag holders have painted him as a perpetual promise ready to eat Ethereum’s lunch…just as soon as he figures out how to build what Ethereum established in 2017. Anyone shilling ADA to you, and there are still legions thanks to how relentlessly it has targeted the uninformed masses, are the crypto equivalent of betting on the Dallas Cowboys thinking they’re going to recreate the 1990s magic any season now, only to have the same disappointing outcome produced by the same tyrannical idiot every year. That’s Cardano.

So the fact that Trump is leading this reserve with Ripple and Cardano is a giant tell as to what this is: a bailout. No one uses them! Solana at least has the excuse of being crypto’s favored casino, but XRP and ADA’s only innovation is the transfer of wealth from their holders to people like Garlinghouse and Hoskinson. Crypto as a whole is pointed in one direction, greed, but with Bitcoin, Ethereum, Solana and the two largest stablecoins comprising a reserve, you could at least make the case that you want to invest in the only things in crypto with any kind of meaningful scale. Those coins and stablecoins comprise 78 percent of crypto’s total market cap, and a lot of what the public sees as crypto’s inherent insanity is actually a very small part of what constitutes “crypto.”

And Trump is focusing on it, all of it. This whole administration is about stealing money from the rubes to transfer to his wealthy friends, and the crypto market is sniffing that out today, with ADA and XRP just getting annihilated.

Crypto is just turbo-nuking as ADA and XRP have retraced half of their pump from yesterday, and most other coins have retraced nearly all of it.

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— Jacob Weindling (in my Cassandra Era) (@jakeweindling.bsky.social) March 3, 2025 at 12:23 PM

The Potential for a Great Crypto Crash

Elementus, a crypto data analysis firm, defended Bitcoin’s Gini coefficient (a measure of a country’s inequality) against economist Nouriel Roubini who said it was worse than North Korea’s. Elementus claims it actually is not, and it even is better than the United States!

As anyone familiar with our modern Gilded Age could surmise, that is not exactly a robust defense. Elementus says that as of 2022, Bitcoin’s Gini coefficient is 82.69 percent. Comparing it to other countries around the world paints a much less rosy picture for the “it’s better than the country that just let a foreign billionaire do a coup” argument. This Gini coefficient is worse than all of Europe, save for Sweden, and is comparable to India (82.3 percent), the Democratic Republic of the Congo (83 percent) Kenya (82.6 percent) and Ukraine (83.4 percent).

Which means that Bitcoin has a small cabal of very wealthy holders who cannot sell significant chunks of their paper wealth without nuking the entire crypto market. As Ryan Cooper excellently detailed for The American Prospect, this “reserve” idea is a crypto bailout, and you can prove it with simple math. Bitcoin whales need a new buyer in size that can dwarf theirs, like the United States government. I would bet a lot of money that XRP and ADA have much worse Gini coefficients, because their markets are much smaller than Bitcoin’s, which means their big holders have even less of an ability to sell their wealth in big chunks, and can only dump small bits of it through stealthy OTC TWAP transfers to nowhere.

The fact that the market is already tanking today tells you how realistic and/or effective this “reserve” idea is. Not to mention that this cockamamie plan has the potential to create real damage that spills over to the regular economy. The crypto market already fell hard last month because of the immense volatility Trump and Melania’s shitcoins introduced, and this is orders of magnitude larger than that move. If the United States government buys large amounts of stupid bullshit, that stupid bullshit will skyrocket in price. The largest holders of that stupid bullshit will see their net worth rise exponentially, as they will finally realize a chunk of their gains they have never been able to sell. They still won’t be able to sell all of it though, and when these prices are elevated, XRP and ADA’s overlords will follow in FTX’s tradition of having some of the largest, most illiquid balance sheet wealth on earth.

FTX went bankrupt because they leveraged that illiquid wealth to the moon, and when their debts came due, they didn’t have the cash to maintain the scheme any longer. This chaos spilled over to the parts of the regular banking system serving stablecoins, which culminated in the Silicon Valley VC dipshits talking themselves into doing a bank run on Silicon Valley Bank. Trump is proposing to bail out crypto’s oldest shitcoins most notoriously targeted at the uninformed public. If they follow in FTX’s footsteps amid a weakening economy with negative GDP growth forecasts and an inverted short end of the collapsing yield curve, it’s not out of the question that this economic crisis Trump and Musk are angling for could be sparked by the absolute dumbest bullshit in all of crypto.

 
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