Cryptocurrency markets have tumbled in recent weeks, erasing much of the gains fueled by Donald Trump's election victory, as investor enthusiasm gives way to macroeconomic concerns and regulatory uncertainty. Bitcoin, the world's largest digital asset, has dropped 21% from its January peak, returning to levels seen shortly after Trump's election in November.
Other cryptocurrencies have suffered steeper losses. Ether has fallen more than 40% since December, while Trump's self-branded meme coin-launched just before his inauguration-has plunged 80% from its January highs, according to CoinMarketCap data.
The decline follows a wave of optimism that Trump's pro-crypto stance would drive a sustained rally. During his campaign, Trump vowed to position the U.S. as a global leader in digital assets, promising to set up a national Bitcoin stockpile and roll back regulatory scrutiny. His administration has since taken steps in that direction, withdrawing investigations into several crypto companies and dropping a lawsuit against Coinbase, the country's largest crypto exchange.
Despite these moves, the market response has been muted. "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.
Some analysts point to broader economic pressures as a key factor in the downturn. The Federal Reserve's reluctance to cut interest rates has dampened investor appetite for speculative assets, while Trump's latest tariff threats have further fueled market uncertainty. The president announced that 25% tariffs on Canada and Mexico would take effect on March 4 and signaled additional levies on Chinese imports, prompting concerns over escalating trade tensions.
"That's increasing all this market uncertainty, which is absolutely not helping Bitcoin at all," said James Butterfill, head of research at asset manager CoinShares. "Until we get clarity on a Bitcoin reserve, I can't see prices recovering significantly."
The broad crypto market has lost nearly $1 trillion in nominal value since December, bringing total market capitalization down to approximately $2.76 trillion, according to CoinMarketCap. The selloff has also impacted U.S. Bitcoin exchange-traded funds (ETFs), with investors withdrawing more than $1 billion in a single day this week, marking the largest outflow since the products launched last year.
Bitcoin's downward momentum accelerated on Friday, plunging as much as 7.2% to its lowest level since early November. The cryptocurrency has now declined more than 20% in February, putting it on track for its worst monthly performance since June 2022. Other digital assets, including Polkadot (DOT) and XRP, fell more than 7% on the day.
"The last time we saw sentiment like this was 2022," said Caroline Bowler, CEO of BTC Markets Pty Ltd, referencing the industry's previous downturn known as "crypto winter."
Despite the pullback, some remain bullish. Standard Chartered analyst Geoff Kendrick has maintained his forecast for Bitcoin to reach $500,000 before Trump leaves office, citing increasing institutional interest. Regulatory filings show that while hedge funds remain dominant buyers, banks and sovereign wealth funds have also begun accumulating Bitcoin exposure. Mubadala Investment Co., an Abu Dhabi sovereign wealth fund, recently disclosed a $436.9 million stake in BlackRock's iShares Bitcoin ETF.
Still, some strategists warn that further declines could be ahead. "Bitcoin always has another 70%+ crash in its future, by construction," said Mark Cudmore, MLIV Executive Editor at Bloomberg. He noted that a key support level for Bitcoin lies between $72,000 and $74,000, which, if breached, could trigger another extended downturn.
Trump has continued to promote his administration's crypto-friendly policies, reiterating his goal of making the U.S. "the crypto capital of the planet and the Bitcoin superpower of the world." However, industry participants remain cautious, awaiting concrete regulatory reforms or major catalysts-such as additional ETF approvals-to reinvigorate bullish sentiment.
