The cryptocurrency market has endured a sobering few months as macroeconomic concerns and a volatile geopolitical situation test the resolve of even the most steely investor. The current scenario is in stark contrast to November 2024, when optimism around a Trump victory in the US presidential elections saw Bitcoin (BTC) and the broader cryptocurrency market post a stunning rally. BTC surged past $100,000 for the first time in the months following President Trump’s victory, reaching a new all-time high of $126,198 in October 2025.
However, the cryptocurrency market lost steam soon after. BTC struggled to maintain momentum and slipped below $100,000, a level that many thought would be the foundation of an unprecedented push to new highs, with expectations of a clear regulatory framework and a crypto-friendly government. Prices are now at multi-month lows and investors are hesitant to dabble in crypto, at least for the moment. So what went wrong?
Euphoria
The Leadup to the 2024 Elections
The mood in the cryptocurrency market during the lead-up to Donald Trump’s 2024 presidential election victory was one of optimism. The industry threw its weight behind the Republican candidate as he promised pro-crypto legislation, clearer regulatory policies, and an end to Gary Gensler’s “regulation by enforcement” approach. However, President Trump was not always an unwavering supporter of cryptocurrency.
During his first term as US president, Donald Trump vehemently opposed the crypto industry, claiming Bitcoin and other tokens were based on “thin air” and could not be called money. He even called it a “scam,” competing with the US dollar. His views changed drastically during the Biden presidency, and leading industry figures rallied in support after he announced his intention to run again in 2024, especially after he promised to make the US the “crypto capital of the world” at the Nashville Bitcoin conference.
The cryptocurrency industry became the largest corporate donor during the 2024 presidential election, donating $238 million, with almost all of it going toward Trump’s campaign. The industry also donated an additional $18 million to the president’s inauguration. The 2024 elections saw the emergence of Fairshake, a Super PAC backed by the cryptocurrency industry. The Super PAC’s donors include Coinbase, Ripple, and Andreessen Horowitz, and it supported pro-cryptocurrency candidates, contributing more toward Republican candidates than Democratic ones.
The Crypto President
Donald Trump won the 2024 US presidential election relatively comfortably, beating Democratic candidate Kamala Harris. The victory sent both cryptocurrency and equity markets surging. US shares and the dollar posted their biggest gains in nearly eight years. Bitcoin surged to a new all-time high after gaining 37% in November 2024, with many expecting a move beyond the coveted $100,000 mark. Trump promised to make the US the crypto capital of the world on the campaign trail, calling himself the “crypto president.”
Trump’s victory had a profound impact on the cryptocurrency industry, with its market capitalization surging from $1.6 trillion to over $3 trillion. BTC briefly corrected after crossing $95,000, before surging past $100,000 at the beginning of 2025. Prices had been on the up since early 2023, but the biggest gains were recorded only when the victory was certain.
Promises and Appointments
Trump made several promises to the cryptocurrency industry to secure their support. He appointed a new Crypto Task Force under the United States Securities and Exchange Commission (SEC) and directed the regulatory body to drop several lawsuits against prominent industry entities and individuals, including Coinbase, Kraken, Robinhood, Consensys, and Tron founder Justin Sun. The SEC also settled its long-running case against Ripple under the Trump administration. Trump chose several crypto-friendly officials to lead key departments, the most significant being Paul Atkins to replace Gary Gensler as SEC chair.
The president also appointed David Sacks as the White House AI and Crypto Czar and Stephen Miran as chairman of the Council of Economic Advisors.
Strategic Bitcoin Reserve
President Trump announced plans to establish a strategic Bitcoin reserve if elected on July 15, 2024. Shortly after the announcement, Senator Cynthia Lummis introduced the BITCOIN Act, proposing the purchase of 1,000,000 BTC for the strategic reserve, but Senator Sherrod Brown blocked the proposal. Shortly after assuming office, Trump signed an executive order to establish a strategic Bitcoin reserve leveraging the asset’s fixed supply as a hedge against financial instability and fiat currency risk.
The reserve was intended to be funded by Bitcoin seized by the US Treasury during forfeitures and civil trials. The order also outlined budget-neutral strategies to acquire more Bitcoin for the reserve and directed the administration to establish a digital asset stockpile consisting of forfeited digital assets, while also directing that no additional acquisitions be made toward the stockpile.
Several US states also introduced state-level legislation to create reserves, including Arizona, New Hampshire, Texas, Utah, and Oklahoma. Global reactions were mostly negative: the managing director of the European Stability Mechanism criticized the shift toward cryptocurrencies, South Korea said it would not include Bitcoin in reserves, and the Swiss National Bank rejected a proposal to create a Bitcoin reserve.
Regulatory Clarity
President Trump also promised regulatory clarity, enacting several measures that were seen as relief for an industry that had grappled with Gensler’s approach. He signed into law the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), creating a comprehensive stablecoin ecosystem. The act passed the Senate 68-30 and the House on July 17, 2025, coming into effect on July 18, 2025. It allowed financial institutions to issue stablecoins backed 1:1 with the US dollar or other highly liquid assets, required monthly reserve disclosures, gave users priority in insolvency, and clarified SEC and CFTC oversight over stablecoins. More on the act is available via Fidelity.
The administration directed financial regulators to review rules prohibiting cryptocurrency companies from obtaining banking licenses and asked the Federal Reserve to grant non-bank crypto entities access to reserve payment accounts. The SEC was directed to repeal Staff Accounting Bulletin 121 (SAB 121), allowing traditional banks to offer customers digital asset custody services. The administration also dropped investigations into several digital asset platforms while settling with others and pardoned several prominent figures imprisoned by the previous administration, including Silk Road founder Ross Ulbricht and Binance founder Changpeng Zhao. It also settled with Tron founder Justin Sun for $10 million after the SEC put the case on hold.
The Cracks Appear
Trump promised sweeping policy changes, enacting legislative pushes, executive orders, and key appointments. However, things have not gone exactly to plan. Policy uncertainties, ethical concerns, and other limitations have slowed the crypto push at a time when markets are struggling due to the prevailing geopolitical situation.
Ethical and Conflict of Interest Concerns
U.S. presidents have historically distanced themselves from business interests while in office. Assets are often placed in blind trusts or divested to avoid conflicts. President Trump did not place his assets in a blind trust; instead he handed control of his business empire to his eldest sons while maintaining real estate, media, and licensing holdings. According to reporting, Trump family-linked crypto ventures have generated over $1.4 billion.
The Trump family has also benefited from the $TRUMP and $MELANIA meme coins, which generated millions in fees. World Liberty Financial, another Trump family-backed crypto venture, has applied to launch a federally regulated bank in the US, raising potential conflict-of-interest concerns. Trump has maintained he has not violated any law, while ethics experts say there is no evidence the president or his family broke the law.
Bitcoin Reserve Stalls
The industry welcomed the executive order establishing a strategic Bitcoin reserve but was disappointed to learn the US would not be buying Bitcoin for the reserve; instead it would contain Bitcoin seized during forfeitures and civil trials. As of March 2025 the US government held 200,000 BTC, but nearly half were linked to the Bitfinex hack and would have to be returned to affected users. The White House crypto and AI czar said the government would explore budget-neutral strategies to acquire more Bitcoin.
The strategic reserve is still being debated in the House. The latest bipartisan legislation proposed on May 22 would lock the US government’s Bitcoin holdings for twenty years while dropping the mandate to purchase 1 million BTC.
Market Reality Sinks In
Optimism about President Trump’s crypto promises waned for several reasons. Policy problems aside, adverse geopolitical and macroeconomic factors and a risk-off sentiment among institutional investors dragged markets even lower, with Bitcoin and other altcoins tumbling to multi-month lows.
Trump’s Tariff Strategy
President Trump’s tariff strategy to renegotiate trade deals caused substantial volatility. Bitcoin dropped to multi-month lows after Trump threatened sweeping tariffs on China, with the flagship cryptocurrency plunging over 8% on October 10, 2025. That market move saw total liquidations of $19.13 billion, which CoinGlass called the largest liquidation event in crypto history.
Overleveraged traders aggravated the crash, and the crypto market cap declined from over $4 trillion to $3.6 trillion. Markets recovered after a US-China deal led to a rollback in tariffs. The October 10 crash occurred just days after Bitcoin surged to its all-time high of $126,198, highlighting the volatility introduced by tariff threats.
Bitcoin suffered another crash in February 2026 after Trump announced plans to increase global tariffs to 15%. The downturn was also linked to investor concerns about a US military buildup around Iran, fears that later proved valid given the ongoing US-Iran conflict and the closure of the Strait of Hormuz. The February downturn pushed Bitcoin to its lowest level since September 2024, prompting speculation that the bull market had ended.
Ethereum and Other Altcoins Stall
Ethereum (ETH) and other prominent altcoins fared no better when faced with tariff-induced uncertainty, macroeconomic headwinds, and a deteriorating geopolitical outlook. Ethereum soared past $4,500 after Trump’s election and inauguration in January 2025, reaching an all-time high of $4,953 on August 25, driven by the passage of the GENIUS Act and surging inflows into spot Ethereum ETFs.
Several listed companies began purchasing Ethereum as a reserve asset, including Bitmine Immersion Technologies, which holds a notable Ethereum treasury. ETH traded above $4,000 until the October 10 market crash, when it fell to $3,510. It continued around $3,500 until February 2026, when it crashed to a multi-month low of $1,742. ETH has struggled to regain momentum since, barely crossing $2,500 and losing nearly 60% since its all-time high.
ETH’s decline decimated corporate treasuries holding the asset, which suffered substantial unrealized losses. The downturn also stopped the expansion of Ethereum treasury companies in their tracks. Prominent altcoins underperformed over the past year, with Bitcoin dominance around 60%, driven by institutional allocations to spot Bitcoin ETFs. Many altcoins also lack clear real-world use cases and have suffered security breaches that eroded investor confidence.
According to JPMorgan, Ethereum and other altcoins will continue trailing Bitcoin unless a major network boom changes market dynamics. Weak DeFi growth, sluggish network activity, and limited real-world utility have eroded investor interest in major altcoins.
Price Action During the US‑Iran Conflict
The US‑Iran conflict has been another significant influence on Bitcoin and the broader crypto ecosystem. The conflict triggered volatility and liquidations as investors fled to safer assets such as gold and institutions adopted a risk-off approach. It also disrupted global supply chains, sent oil prices soaring, and pushed inflation higher, all of which could keep central banks on a tighter interest-rate path, pressuring risk assets like Bitcoin.
The conflict escalated on February 28, 2026, when the US and Israel launched operations targeting Iranian facilities and leadership. BTC plunged to a low of $63,018 almost immediately, triggering a wave of liquidations. Other cryptocurrencies, including Ethereum and Solana (SOL), recorded sharp declines as leveraged positions were liquidated.
Uncertainty around the Strait of Hormuz, which handles roughly 20% of global seaborne oil trade, pushed oil prices to near record levels and fueled inflation concerns. Investor sentiment slipped into “Fear” territory as the crypto Fear and Greed Index hit very low levels, forcing many to reduce exposure to risk assets. Volatility surged and institutional investors looked for safer avenues.
Crypto Struggles While Equities Rally
While crypto struggled, equity markets remained surprisingly stable and in some cases reached record levels. Bitcoin, Ethereum, XRP, Solana, and other major tokens faced intense selling pressure while gold surged. The S&P 500 traded close to record levels, creating a divergence between crypto and equities driven by capital rotation, macro volatility, wealth preservation, geopolitical concerns, and overleveraged traders.
Bitcoin was down roughly 40% from its all-time high as of May 2026, wiping out nearly all its gains over the past year and forcing even long-term holders to reassess positions. Liquidity has been elusive and capital into crypto ETFs has dried up, contributing to the disparity with equities.
A Correction or Collapse
Bitcoin’s slide over the past year has been called the “worst crisis in crypto since 2022” by the New York Times. Market experts who predicted $200,000 BTC were forced to backtrack as the downturn raised the specter of another crypto winter.
The industry felt that politics, regulatory uncertainty, and impossible asks were preventing innovation. Many in the industry believed the previous administration had victimized them and lobbied heavily to gain political influence, spending $238 million to support Trump. That strategy initially seemed to work, but the tariff strategy and geopolitical shocks exposed the industry when conditions turned.
The downturn is now widely viewed as a structural correction rather than a complete collapse. Volatility remains high, with 10%–20% price swings that are common in crypto. Moreover, the market capitalization has remained around $2.5 trillion, unlike the 2022 crash when it slipped below $1 trillion. Still, the combination of macro and geopolitical concerns, liquidations of leveraged positions, and supply-chain disruptions made the correction feel particularly brutal.
Crypto Market Outlook Remains Positive
Despite the challenges, the bullish structure of Bitcoin and the broader market remains intact. Analysts believe markets could recover strongly if conditions change. The GENIUS Act created a regulatory framework for stablecoins and clarified operational guardrails, while the SEC repealed SAB 121, allowing traditional banks to offer crypto custody services.
Institutional interest has transformed Bitcoin into a strategic asset class, driving the emergence of Bitcoin treasury companies and regulated products like spot Bitcoin ETFs offered by legacy finance players. Meanwhile, some companies continue to accumulate Bitcoin for their treasuries.
The CLARITY Act is still being debated. It cleared the House and advanced in the Senate but faces opposition from banks, Democratic lawmakers, labor unions, regulators, and parts of the crypto industry, which fear it may incentivize deposit outflows.
A US‑Iran ceasefire could ease geopolitical tensions, improve supply chains, and help bring oil prices under control. An improved macro outlook could allow the Federal Reserve to consider rate cuts, easing pressure on Bitcoin and other risk assets. For now, markets are waiting for a clear catalyst.
Reports from industry research teams, including Coinbase and CoinDCX, highlighted regulatory progress and institutional adoption as reasons for cautious optimism. Market sentiment, while fragile, has improved; the passage of the CLARITY Act could be the catalyst for a revival.
But the recent months may have taught the industry a lesson: angling for a seat at the political table can have costs. Political association with a single administration has divided the industry and tied price action to policy announcements. The Trump family’s crypto associations and controversial pardons raised ethical concerns and undermined trust. The industry must decide whether to lean into politics or return to economic fundamentals.
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