Cryptocurrency Prices Face Steep Decline Amid Market Uncertainty

Cryptocurrency prices have dropped significantly in recent weeks, with Bitcoin and Ethereum erasing nearly all the gains made after Donald Trump’s election victory. Analysts caution that a sustained rebound is unlikely without a clear pro-crypto policy shift or monetary easing from the Federal Reserve.

Bitcoin Drops 21% as Pro-Crypto Hopes Fade

• Bitcoin (BTC) is down 21% from its January 20 peak, trading near levels seen shortly after Trump’s election in November.
• Ethereum (ETH) has fallen more than 40% since December, as risk appetite dwindles.
• Trump’s own meme coin has crashed 80% from its January peak, underscoring waning enthusiasm.

“The market is disappointed,” said James Butterfill, head of research at CoinShares, citing fading hopes for a national Bitcoin stockpile.

Trump’s Crypto Promises Yet to Boost Market Sentiment

During his campaign, Trump vowed to be the “crypto president”, pledging to:

• Overhaul crypto regulations and withdraw SEC lawsuits against crypto firms.
• Establish a national Bitcoin reserve to strengthen the U.S. economy.
• Appoint crypto advocates like Howard Lutnick and David Sacks to key roles.

While the SEC has dropped its lawsuit against Coinbase and eased investigations into crypto firms, these moves haven’t lifted prices as many expected.

Hawkish Fed & Tariff Uncertainty Weigh on Crypto Prices

Aside from policy expectations, broader macroeconomic factors are adding pressure:

• The Federal Reserve remains cautious about interest rate cuts, limiting liquidity.
• Trump’s tariff threats are creating market uncertainty, dampening risk asset demand.

“Until we get clarity on a Bitcoin reserve, I can’t see prices recovering significantly,” said Butterfill.

Nearly $1 Trillion Wiped from Crypto Market

• Since December, global crypto market capitalization has fallen to $2.76 trillion, losing nearly $1 trillion in value.
• Investors are resetting expectations as Trump’s crypto working group won’t release its findings for at least another 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.

Bitcoin’s Long-Term Bullish Case Remains Intact

Despite the downturn, some analysts remain bullish on Bitcoin’s long-term trajectory:

• Geoff Kendrick of Standard Chartered maintains his $500,000 Bitcoin target before Trump leaves office, driven by new institutional buyers.
• Mubadala Investment Co., an Abu Dhabi sovereign wealth fund, disclosed a $436.9 million stake in BlackRock’s iShares Bitcoin ETF.
• Hedge funds, banks, and sovereign wealth funds continue to accumulate Bitcoin through ETFs.

What’s Next for Crypto Prices?

For a sustained recovery, analysts say the market needs:

1. Clear regulatory framework from Trump’s administration.
2. More ETF approvals to boost institutional adoption.
3. A Federal Reserve rate cut, improving liquidity conditions.

Until then, cryptocurrency prices may remain volatile, with investors waiting for a definitive bullish catalyst.