Ned Davis Research's Trump Trade Index has fallen roughly 16% since May, erasing the outperformance the basket built earlier in the year. Higher energy prices, firmer inflation expectations and a stronger dollar turned the policy-themed ETFs around, and the crypto side of the same trade has fared worse.
Ned Davis Research's Trump Trade Index has fallen roughly 16% since May, erasing the outperformance that made the strategy look clever a few months earlier. Several of the component ETFs now trade in negative territory for the year.
Wall Street branded the trade in late 2024. A dozen ETFs tied to homebuilding, defense and domestic manufacturing surged past the S&P 500 in the opening months of the year. Then came May.
Energy, rates and the dollar turned against the basket
The unwinding is not random. Escalating tensions between the US and Iran pushed energy prices higher, which fed back into inflation expectations.
Higher inflation means higher interest rates, and higher rates are generally bad news for rate-sensitive sectors such as homebuilding, one of the core themes in the index. The stronger US dollar that accompanied those moves added another headwind for the reshoring and manufacturing plays that were supposed to benefit from tariff policy.
That basket started out broader than equities alone. Early iterations of the index included Bitcoin and space-related sectors as beneficiary themes alongside reshoring.
Bitcoin has given back its post-election gains
Bitcoin peaked above $125,000 following the 2024 election, riding a wave of policy optimism as the Trump administration moved to establish a Strategic Bitcoin Reserve, funded through seized assets, and pushed forward on stablecoin regulation.
But the asset has since lost all of those post-election gains, with declines exceeding 50% from those highs.
Trump-branded memecoins took the sharpest hits of all. Tokens like $TRUMP and $MELANIA have shed approximately 98% of their value from peak levels.
Trump Media and Technology Group added another layer to the story by exploring crypto-related products, further entangling the political brand with digital asset markets.
What the reversal signals for both markets
For crypto investors, the 50%-plus decline from Bitcoin's post-election peak is a reminder that even genuine regulatory tailwinds can be overwhelmed by macro pressure. The asset class remains deeply correlated with risk sentiment, and when traditional markets get nervous, crypto tends to amplify the move rather than diversify against it.
Source: Crypto Briefing
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