Cryptocurrency Slump Erases This Year's Market Gains Along With Trump-Inspired Market Enthusiasm

With 2025 coming to an end, the former president's supportive stance towards cryptocurrency has not proven to be enough to support the sector's advances, previously the driver behind broad optimism and excitement. The last few months of 2025 have seen an estimated $1 trillion in market capitalization erased from the digital asset market, despite bitcoin hitting an all-time-high price of $126,000 in early October.

A Fleeting High and a Historic Liquidation

The October price peak was short-lived. The flagship cryptocurrency's value tumbled just days later following an announcement of 100% tariffs on China sent shockwaves across the market on October 12th. The crypto market saw a staggering $19 billion liquidated in 24 hours – the largest forced selling event ever documented. The second-largest crypto, Ethereum, saw a 40 percent decline in price in the subsequent weeks.

Supportive Regulations Collides With Global Economic Forces

Crypto advocates got the supportive administration it had anticipated throughout the election. Within days of taking office, an executive order was issued rolling back limitations against digital assets and introduced new favorable regulations alongside a federal task force focused on crypto.

“Cryptocurrency is a vital component for technological progress and economic development nationally, as well as America's international leadership,” the order read.

Later in March, the announcement of a cryptocurrency reserve sparked a notable market surge, with prices for several named coins soaring by over 60%. Bitcoin itself rose 10% immediately following the news.

Expert Analysis: A "Risk-On" Asset

Cryptocurrency is sensitive to market sentiment and investor confidence in global markets, noted an industry expert. It’s what is called a risk-on asset, an investment which performs well when investors are feeling confident about the economy and are willing to take on more risk.

“The current government might support crypto, but tariffs and rising interest rates trump positive vibes,” they continued. “This also serves as just a reminder, particularly to people in crypto, that broader economic factors really matter more than political stances.”

Tumultuous Trading

In November, bitcoin underwent its biggest drop in value since 2021, bringing the coin’s value below $81,000. Although it recovered some of that value afterward, the start of the final month with another slump, a six percent fall triggered by a major bitcoin holder cutting its earnings forecast due to the slide in crypto prices. Bitcoin’s price now hovers near $90,000.

Fears of a Prolonged Downturn

Market observers fear the sector may be heading into what's termed a prolonged bear market, a period of low activity and declining prices. The previous such downturn lasted from the end of 2021 into 2023. That period witnessed Bitcoin fall approximately 70% in price.

“This latest collapse does not reflect a shift in sentiment, but a collision of three structural factors: the aftershocks of a $19bn leverage washout; a risk-off rotation spurred by US-China tariff tensions; and, importantly, the possible unwinding of the corporate treasury trade,” stated a noted economist.

Link to Tech Stocks

Another potential factor impacting digital assets is the decline in share prices of AI stocks. “One of the reasons for the link to tech stocks is because a lot of mining operations have diversified their energy into new datacenters,” an expert said. “Pessimism in tech tends to sneak into the crypto space.”

Long-Term Optimism Remains

Despite concerns about a bear market, notable players in the crypto space voiced optimism about the long-term value of the currency. A top CEO remarked “it is impossible” Bitcoin's value would go to zero and that 2025 would be seen as the time “when crypto went from a fringe market to a mainstream institution”. Another pointed out increased investment from institutional investors.

Analysts suggest this downturn fits the pattern of past four-year bitcoin cycles , adding that a deeply prolonged downturn is not a certainty.

“From the perspective of a traditional bitcoin cycle, we are actually technically in a bear market,” said one analyst. “However, it's clear, even with these major headwinds that are affecting the market, bitcoin has still managed to set a price above $80,000.”