The Trump Trade Index from Ned Davis Research has dropped about 16% since May, wiping out the early gains it saw right after the 2024 election. Initially, a cluster of ETFs focused on sectors like homebuilding, defense, and domestic manufacturing surged ahead of the S&P 500, fueled by hopes tied to White House policies.
What triggered the downturn?
The shift wasn’t random. Rising tensions between the US and Iran sent energy prices higher, which in turn pushed inflation expectations up. Inflation hikes usually lead to higher interest rates, a negative for sectors sensitive to borrowing costs such as homebuilding, a core part of the Trump Trade basket. also the stronger US dollar made reshoring and manufacturing plays less attractive, undermining the trade’s core thesis.
At first, the index included a wide range of related themes, including Bitcoin and space sectors, anticipating they would benefit from the administration’s policies.
Crypto’s sharp reversal
Bitcoin’s rally after the 2024 election was spectacular, peaking above $125,000 amid real policy moves like the proposed Strategic Bitcoin Reserve funded by seized assets and progress on stablecoin regulation. However, Bitcoin has lost all post-election gains, plunging more than 50% from its highs.
Even worse, Trump-themed memecoins such as $TRUMP and $MELANIA have collapsed by roughly 98%, signaling extreme volatility in politically linked digital assets. The Trump Media and Technology Group’s involvement in crypto products further intertwined the political brand with the digital asset market.
For investors, the sharp Bitcoin decline highlights how macro factors can overwhelm even genuine regulatory support. Crypto remains highly sensitive to overall risk appetite, often amplifying market moves instead of providing diversification.
This content is for informational purposes only and is not financial advice.
