Crypto Prices Fall as Trump-Fueled Momentum Stalls

Cryptocurrency prices have dropped sharply in recent weeks, wiping out gains made following Donald Trump’s election win. With Bitcoin, the largest cryptocurrency, down by 21% from its January 20 peak and other major cryptocurrencies like Ether seeing even steeper declines, the market sentiment has shifted. Analysts suggest that the lack of significant pro-crypto action by the Trump administration and broader economic uncertainty have further dampened investor confidence.

Bitcoin Retreats Amid Expiration of Post-Election Optimism

Bitcoin’s performance has taken a hit, erasing much of the rally sparked by Trump’s promises of a “crypto-friendly presidency.” His election campaign pledged bold moves such as establishing a national bitcoin reserve and overhauling crypto regulations. However, recent developments have failed to meet the high expectations of cryptocurrency advocates.

Some analysts believe the market is waiting for a decisive bullish indicator, such as rate cuts by the U.S. Federal Reserve or the establishment of a clear regulatory framework under the Trump administration.

Ether and Other Cryptos See Steeper Declines

Bitcoin is not alone in this downturn. Ether, the second-largest cryptocurrency in the world, has seen its value drop over 40% since December. Additionally, Trump’s own “meme coin,” launched days before his inauguration, has fallen by 80% from its January peak, raising questions about its long-term value amid conflict-of-interest concerns.

Regulatory Disappointment Dampens Investor Confidence

Enthusiasm in the crypto market initially surged when Trump appointed crypto proponents to key positions in his administration and the Securities and Exchange Commission (SEC) dropped investigations into several crypto companies. However, tangible results have been slow to materialise.

Despite these moves, the administration’s overall approach has been viewed as vague rather than revolutionary. For instance, a recent executive order to form a cryptocurrency working group aimed at drafting new regulations and considering the creation of a national bitcoin stockpile fell short of market expectations. Investors had hoped for bolder actions, such as direct bitcoin purchases by the U.S. government, but these hopes remain unrealised.

James Butterfill, Head of Research at CoinShares, noted, “Until we get clarity on a bitcoin reserve or regulatory framework, I can’t see prices recovering significantly.”

Broader Market Challenges

The crypto market faces other headwinds, including tighter monetary policy from the Federal Reserve and the lingering threat of tariffs. Together, these factors have added to the uncertainty surrounding speculative assets like cryptocurrencies.

Since its December peak, nearly $1 trillion has been wiped from the global crypto market’s nominal value, reducing its total capitalisation to $2.76 trillion. Some investors are recalibrating their expectations for the sector, with preliminary reports from the Trump administration’s crypto working group not expected for at least another month.

Mixed Sentiments in the Crypto Community

While some market watchers remain cautious, others are optimistic about the long-term potential of cryptocurrencies. Geoff Kendrick, an analyst at Standard Chartered, continues to maintain a bold prediction for Bitcoin to reach $500,000 by the end of Trump’s presidency. His forecast is based on the expectation that new buyers, including hedge funds and sovereign wealth funds, will enter the market.

Recent data supports this view, with U.S. regulatory filings revealing increased crypto allocations among asset managers. For example, Abu Dhabi’s Mubadala Investment Co disclosed a $436.9 million stake in BlackRock’s iShares Bitcoin ETF.

However, the lack of immediate market-friendly actions continues to weigh on optimism. Gabe Selby, Head of Research at CF Benchmarks, remarked, “The initial excitement surrounding the Trump administration’s perceived pro-crypto stance appears to be in a phase of recalibration.”