The former president, now back in the political spotlight, has reportedly turned an £800m profit from cryptocurrency investments in his first year of renewed involvement. The figure, disclosed by sources close to his financial team, has sent ripples through the City of London and prompted a cautious response from the Treasury, warning of 'heightened volatility' in digital asset markets.
For someone who once dismissed bitcoin as 'not money', this is a remarkable reversal. It raises two questions. First, what does this say about the state of the crypto market? Second, what does it say about the judgment of investors piling into assets that a former US president can move with a single tweet?
The timing is awkward. The Bank of England has been wrestling with inflation that refuses to die, and gilt yields have been jumping around like a nervous foal. The last thing the Old Lady needs is a crypto circus distracting from the serious business of fiscal consolidation. Yet here we are. A man who built his brand on making deals is now making a killing from the most volatile asset class since tulip bulbs.
Let us examine the numbers. £800m. That is roughly the annual cost of running the Department for Business and Trade. Or, to put it another way, about 0.5% of the UK's total gilt issuance this year. It is not trivial. But more importantly, it is a signal. If a political figure of this magnitude can generate that kind of return, what does it say about the market's rationality? It suggests that crypto is now firmly entangled with political sentiment. That is a dangerous cocktail.
The Treasury's response was predictably measured. A spokesperson said, 'We continue to monitor the digital asset market and are working with international partners to ensure robust regulation.' Which is Treasury-speak for 'we have no idea what to do but we cannot say that.' They are right to be wary. The volatility of crypto is not just a problem for speculators. It spills over into traditional markets through correlation, liquidity channels and, most importantly, confidence.
Consider the capital flight risk. If the UK were to adopt a more hostile stance towards crypto, investors might simply move their holdings offshore. The Bahamas, Switzerland and Singapore are already circling. The Treasury knows this. That is why they have been slow to act. But the price of inaction is that the market becomes a casino for the political elite. And the rest of us pay the price when it crashes.
The Bank of England will be watching closely. Governor Bailey has repeatedly warned about the 'intrinsic value' problem. He is right of course. But value is what people believe it is. And right now, people believe that Trump can make them money. That is a dangerous faith.
For investors, the lesson is clear. Diversify. Do not bet the farm on any one asset, least of all one that can be swayed by a single personality. The market is not efficient when it is driven by emotion. It is a madness of crowds. And as any Treasury official will tell you, the hangover is always painful.
In the end, this story is not really about Trump. It is about a financial system that has lost its anchors. When a former president can make £800m from crypto while the rest of us struggle with rising mortgage rates, something has gone wrong. The Treasury knows it. The City knows it. But nobody wants to be the one to pop the bubble.
