Cryptocurrency prices have seen a significant decline in recent weeks, and analysts suggest a recovery is unlikely in the near term. Some of the largest digital currencies have reversed nearly all the gains they made after Donald Trump’s election win, which had initially sparked enthusiasm across the crypto market.
Bitcoin (BTC), the world’s largest cryptocurrency, has fallen by 21% since its January 20 peak, returning to levels not seen since shortly after Trump’s 2016 U.S. presidential election victory. The decline has been attributed to fading hopes for a national bitcoin reserve and ongoing concerns over potential tariff threats, which have dampened demand for speculative assets.
Other cryptocurrencies have experienced even sharper declines. Ether (ETH), for example, has lost more than 40% of its value since December. Trump’s own “meme coin,” which he introduced just days before his inauguration, has plummeted by 80% from its January peak, according to data from CoinMarketCap.
Despite Trump’s promises of pro-crypto policies during his campaign, including the creation of a national bitcoin stockpile and regulatory reforms, the market has been underwhelmed by his administration’s actions. Trump appointed crypto advocates such as Howard Lutnick and David Sacks to prominent positions but has yet to deliver on the most anticipated initiatives.
The Securities and Exchange Commission (SEC), under Trump’s leadership, has withdrawn investigations into multiple crypto firms and dismissed a lawsuit against Coinbase, the largest cryptocurrency exchange in the U.S. However, these moves have not significantly impacted crypto prices, leading some analysts to suggest that expectations about Trump’s pro-crypto policies may have been overly optimistic.
In the first week of his presidency, Trump issued an executive order establishing a cryptocurrency working group tasked with exploring digital asset regulations and considering the creation of a national crypto stockpile. However, the administration has not acted on expectations that the U.S. government would start purchasing bitcoin.
James Butterfill, head of research at CoinShares, noted that market disappointment stems from the lack of decisive actions on these initiatives, especially amidst growing market uncertainty driven by the Federal Reserve’s hawkish monetary policies and Trump’s tariff threats. “Until we get clarity on a bitcoin reserve, I can’t see prices recovering significantly,” said Butterfill.
Since December, nearly $1 trillion in market value has been wiped from the global crypto market, leaving its total market capitalization at approximately $2.76 trillion, according to CoinMarketCap. With preliminary reports from the crypto working group not expected for at least another month, investors are recalibrating their expectations.
“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. “For sentiment to shift more decisively, a clearer regulatory framework or a major catalyst—such as additional ETF approvals or policy shifts—seems to be necessary.”
Last year, the SEC approved the first ETFs tied to the spot price of bitcoin, sparking a rally that saw the cryptocurrency reach new record highs. Despite the recent downturn, some analysts, like Geoff Kendrick of Standard Chartered, remain bullish on bitcoin. Kendrick maintains a $500,000 target for the cryptocurrency before Trump leaves office, citing continued interest from new institutional investors, including banks and sovereign wealth funds.
Recent filings show that hedge funds remain the primary crypto buyers, but banks and sovereign wealth funds are increasingly entering the market. Notably, Abu Dhabi’s Mubadala Investment Co. reported a $436.9 million stake in BlackRock’s iShares Bitcoin ETF in the fourth quarter of 2024, signaling ongoing institutional confidence in the long-term potential of digital assets.
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