‘Trump trades’ like the dollar and bitcoin are stalling, while Chinese stocks are racing ahead
That didn’t take long.
President Donald Trump has been back in the White House for less than a month. Yet many of the most popular “Trump trades” have already seen their momentum wane, while Chinese and European stocks — which had struggled in the aftermath of his electoral victory — are racing ahead.
After surging through the first half of January, the U.S. dollar DXY has softened against both developed and emerging-market rivals over the past few weeks, as currency traders come around to the idea that Trump’s threats for universal tariffs might simply be the opening salvo in a negotiation to wring economic and political concessions from other nations.
“It’s definitely a negotiating tactic,” said Brian Mulberry, a portfolio manager at Zacks Investment Management, about Trump’s tariff plans.
In other instances, the shift could be a sign that the speculative fervor ignited by Trump’s decisive victory has started to cool. Cryptocurrencies, one of the most successful Trump trades, have mostly moved sideways since the inauguration. The price of bitcoin BTCUSD, the pioneering digital currency, has struggled to reclaim $100,000.
And popular “meme” tokens, like Trump’s own crypto TRUMPUSD and the infamous fartcoin , have fallen dramatically. On the campaign trail, Trump often spoke about plans to create a strategic bitcoin reserve. But so far, the administration hasn’t announced any plans to follow through.
Many U.S. stocks closely associated with the Trump trade have also struggled. Shares of Geo Group Inc. GEO, a private-prison company expected to benefit from mass deportations, have fallen about 25% since the inauguration. As of Friday, they were trading just shy of $27 a share.
Tesla Inc. TSLA, which appeared to benefit from Chief Executive Elon Musk’s close association with Trump, has slumped since the start of 2025, while shares of Trump Media & Technology Group Corp. DJT have also turned lower recently.
But it isn’t just individual stocks: Broad U.S. stock indexes like the S&P 500 SPX have drifted aimlessly over the past three weeks. The index ultimately finished lower Friday after making a run at a fresh record high.
Three weeks without a new S&P 500 record high might not seem like a big deal. But there are signs that some investors are growing increasingly nervous.
The latest survey from the American Association of Individual Investors, a widely followed gauge of overall market sentiment, found that more than 47% of respondents had turned downbeat on stocks. That was the highest bearish reading since late 2023.
Stocks’ loss of upward momentum might be making the retail crowd anxious, but so far, Steve Sosnick, chief strategist at Interactive Brokers, sees little reason for concern. Instead, he chalked it up to a classic “buy-the-rumor, sell-the-news” reaction.
“There’s a reason why the phrase ‘buy the rumor, sell the news’ is popular,” Sosnick said. “Markets can frequently get exuberant about potential events, only to discover that the reality is less exciting than the anticipation.”
Chinese and European stocks race ahead
While U.S. stocks have dithered, Chinese and European shares have galloped ahead.
Hong Kong’s Hang Seng Index HK:HSI has gained nearly 13% since the start of 2025, while Europe’s Euro Stoxx 50 index XX:SX5E has gained more than 9%, tallying a record high on Thursday for the first time in 25 years. U.S.-traded shares of Alibaba Group Holding Ltd. BABA, the Chinese e-commerce and technology giant, have soared more than 45% since Jan. 1, according to FactSet data.
Jason Hsu, chief investment officer of Rayliant Global Advisors, said the artificial-intelligence app DeepSeek’s demonstration that China can actually innovate in the realm of AI technology has helped to revive the fortunes of its flagging stock market.
“DeepSeek foundationally changed the psychology of Chinese investors,” Hsu said. “Previously, they had been under the assumption that China was just in this chokehold laid down by the U.S. Now, people are thinking that China can compete — not just on manufacturing, but on the frontiers of software development.”
DeepSeek isn’t the only notable development to come out of China recently. Shares of BYD Co. Ltd. HK:1211 CN:002594 surged after the leading Chinese electric-vehicle maker unveiled its “God’s Eye” full self-driving technology, and said it would enable it on most of its vehicles for no extra cost. The dollar’s weakness and Trump’s less aggressive tack on tariffs have also helped boost Chinese stocks, and the Chinese yuan USDCNY as well.
When it comes to Trump trades like the dollar, navigating the path forward could prove particularly tricky. If Treasury yields continue to trend lower and Trump abstains from imposing sweeping tariffs, it is possible that the dollar could continue to ease.
But nobody can say for sure what Trump might be planning. For now, any sign that the president might make good on his trade threats would likely give the greenback at least a temporary boost.
“It’s like a roulette wheel,” said Ryan Dykmans, chief investment officer at Dunham & Associates Investment Counsel. “You really don’t know what’s going to happen next.”
If the past is any guide, cryptocurrencies like bitcoin might struggle to move meaningfully higher in the near term. Even after the latest pullback, bitcoin prices are still up by more than 40% since the election, FactSet data showed.
Others agreed that the near-term future for the U.S. stock market looks more promising. The fundamentals underpinning U.S. stocks remain intact, and the U.S. economy has continued to grow more quickly than that of the eurozone, while China has struggled with the aftermath of the historic collapse of its real-estate market.
The S&P 500, Nasdaq Composite COMP and Dow Jones Industrial Average DJIA all finished the week higher despite a hotter-than-expected inflation report released Wednesday. So far, investors appear to be taking in stride the prospect that the Federal Reserve might leave interest rates on hold until later this year.
“I don’t think there’s any concern about the bull market petering out,” said Eric Schiffer, CEO of the Patriarch Organization.
Ultimately, whether this is just a “catch-up trade” or a larger shift in market leadership remains to be seen. For his part, Dykmans will be paying close attention to fundamentals like earnings growth, while Schiffer said he would continue to monitor corporate earnings calls for signs that management teams are growing more concerned. Lately, mentions of the word “recession” have been pretty rare, he noted.