In a shocking twist, economist and famous cryptocurrency critic Peter Schiff has blamed United States President Donald Trump for masterminding a grand 'pump and dump' scheme with cryptocurrencies. Schiff is urging a congressional inquiry into the alleged scam, saying that Trump's actions have resulted in enormous financial losses to innocent investors.
The cryptocurrency market experienced a steep rally following the US President's surprise announcement about forming a US Crypto Strategic Reserve. The reserve would comprise five prominent digital assets, Bitcoin, Ethereum, XRP, Solana, and Cardano. The news generated mass excitement among investors and a huge price jump. Bitcoin surged 10 percent to a high of US$92,905, while Ethereum surged 13 percent to US$2,443.
Cardano spearheaded the rally with a staggering 64 percent increase to US$1.07, followed by XRP's 25 percent hike to US$2.79 and Solana's 18 percent rise. Peter Schiff, an outspoken critic of cryptocurrency, wrote in X, formerly known as Twitter, "If Bitcoin's success is predicated on the dollar's failure, if the US is foolish enough to actually create a Bitcoin strategic reserve, this development will accelerate the dollar's demise, potentially benefiting Bitcoin in the short run. But the ultimate winner will be gold."
The euphoria was short-lived as the market's momentum turned sharply sour by next day, as doubts over the initiative gained ground. Bitcoin dipped 9.8 percent to US$83,725, while Ethereum dipped 15 percent to US$2,083.
The overall crypto market capitalisation declined by 10.5 percent to US$2.76 trillion. Other major altcoins also suffered heavy losses, Cardano tumbled 25 percent, Solana dropped 19 percent, Dogecoin declined 16 percent, and XRP slumped 18 percent. The volatility highlights the uncertainty surrounding the government involvement in the crypto space and its impact on market sentiment.
Only days before returning to the presidency, Trump launched the TRUMP meme coin on his social media site, Truth Social. The currency saw an instant jump in valuation, with the market capitalisation of the cryptocurrency hitting a whopping US$58 billion. Yet this shooting star ascent was brief, as the value of the coin rapidly fell shortly after, with questions arising as to whether there was market manipulation involved.
The famous cryptocurrency critic Peter Schiff, used social media to convey his dismay at the event, calling it the 'biggest crypto rug pull of all time.' He critiqued the timing and provenance of Trump's Truth Social posts, accusing those with insider information of profited from the market actions to their gain. Schiff is calling on Congress to thoroughly investigate the issue, including looking into communications between Trump's staff, family, friends, campaign contributors, and Truth Social workers.
Taking to X, Schiff launched attacks on Trump, labelling him of 'first crypto president', "Donald Trump, the first crypto president, just helped pull off the biggest crypto rug pull of all time. A congressional investigation is now warranted to find out the following regarding this pump-and-dump scheme."
If Congress proceeds with an investigation, it could lead to deeper scrutiny of crypto policies and potential political conflict of interest. Although Schiff's accusations have fuelled controversy, Trump's supporters write off the claims as political.
The market is extremely unstable with the traders eagerly awaiting any new Trump or Trump supporter policy moves that could induce another boom or bust. Whether the US Crypto Reserve is a dangerous gamble or a risky financial strategy, the uproar is hardly dying down. Further updates may emerge if Congress proceeds investigation.