Cryptocurrency Prices Retreat After Trump-Era Enthusiasm
Cryptocurrency prices have faced a significant downturn in recent weeks, largely reversing the gains experienced following Donald Trump’s election victory. According to some analysts, the market is likely to remain subdued until more positive signals emerge, such as clearer crypto regulations.
Bitcoin, the most prominent cryptocurrency, has decreased by 21% from its January 20 peak, returning to levels observed shortly after Trump’s presidential win in November. The cooling of expectations surrounding a strategic bitcoin reserve coupled with potential tariff threats have dampened demand for speculative assets.
Other cryptocurrencies have seen a steeper decline; ether is down over 40% since December.
During the campaign, Trump promised a pro-crypto approach, including establishing both a national bitcoin stockpile and a comprehensive overhaul of crypto regulations. He appointed notable crypto proponents to key roles within his administration. In reality, the Securities and Exchange Commission has withdrawn investigations of several crypto companies and dropped a lawsuit against Coinbase. These measures have had little immediate impact on crypto prices, leading some analysts to believe pre-election expectations may have been overly optimistic.
In his first week in office, Trump initiated by executive order the creation of a cryptocurrency working group tasked with developing new digital asset regulations and exploring the feasibility of establishing a national crypto stockpile. This move was met with disappointment by some investors who had hoped for instructions for the U.S. government to purchase Bitcoin.
“The market is disappointed with that,” said James Butterfill, Head of Research at asset manager CoinShares.
Butterfill went on to note that crypto prices face additional headwinds from the Federal Reserve’s restrictive monetary policy and Trump’s tariff threats, creating a high degree of market uncertainty, which is having a detrimental effect on Bitcoin.
Since December’s peak, nearly $1 trillion has been removed from the global crypto market’s nominal value, with a total market capitalization of approximately $2.76 trillion, according to CoinMarketCap.
Some investors are re-evaluating their expectations, with preliminary reports from the Trump administration’s crypto working group not expected for at least a month.
“The initial excitement surrounding the Trump administration’s perceived pro-crypto stance appears to be in a phase of recalibration,” said Gabe Selby, Head of Research at CF Benchmarks, a digital asset index provider. Selby added that a more decisive shift in market sentiment will require either a clearer regulatory framework or additional ETF (exchange-traded fund) approvals or policy shifts.
The SEC approved the first ETFs tied to Bitcoin’s spot price last year, which helped to push the cryptocurrency to a new record high.
Geoff Kendrick, a Standard Chartered analyst, remains bullish, projecting Bitcoin to reach $500,000 before Trump leaves office, significantly surpassing its record high of $109,071. Kendrick bases his prediction on the belief that new buyers will enter the crypto market.
Regulatory filings reveal that although hedge funds remain the primary buyers, banks and sovereign wealth funds are also increasing their investments, Kendrick added. Quarterly filings also show that asset managers increased their allocations to U.S. ETFs tied to the price of spot Bitcoin in the fourth quarter of 2024.
Mubadala Investment Co—an Abu Dhabi sovereign wealth fund—reported a $436.9 million stake in BlackRock’s iShares Bitcoin ETF.
