American Bitcoin plunged 50% during a crypto rally, exposing a fatal flaw in the “Trump proxy” trade

American Bitcoin (ABTC), a mining stock linked to the Trump family and pitched as a Bitcoin proxy, plummeted up to 50% intraday on December 2nd, even as Bitcoin (BTC) staged a significant relief rally, climbing 8% toward $93,324. This divergence occurred because the two assets responded to entirely different catalysts. Bitcoin's bounce was driven by improving macro conditions, including the end of the Fed's quantitative tightening and Vanguard opening access to crypto ETFs. Conversely, ABTC's crash was triggered by the first major lock-up expiry, which flooded the market with newly freed pre-merger and private-placement shares onto a thin float, causing early investors to dump stock. This event exposed the fatal flaw in the "proxy trade": ABTC is a levered, politically branded equity wrapper susceptible to stock supply shocks and specific political risks, unlike Bitcoin itself, which is governed by predictable supply and macro factors. The structural differences—changing float, inherent Trump-specific risk, and the leveraged nature of mining stocks—caused the link between ABTC and BTC to break.

(Source：CryptoSlate)