🔗 Share this article Digital Asset Downturn Erases This Year's Market Gains and Trump-Inspired Market Enthusiasm As 2025 draws to a close, the former president's supportive approach to digital currency has failed to be enough to support the sector's advances, once the driver behind market-wide optimism and excitement. The last few months of 2025 have seen an estimated $1 trillion in market capitalization erased from the crypto market, despite bitcoin hitting an all-time-high price above $125,000 in early October. A Fleeting High Followed by a Historic Liquidation The October price peak proved temporary. The flagship cryptocurrency's value plummeted just days later after a declaration of sweeping tariffs on China sent shockwaves across the market in mid-October. Digital asset markets experienced an unprecedented $19 billion wiped out in 24 hours – the largest liquidation event on record. The second-largest crypto, Ethereum, saw a 40% drop in value in the subsequent weeks. Pro-Crypto Policy Collides With Macroeconomic Reality The industry was delivered the pro-bitcoin president it had anticipated during the campaign. Within days of taking office, a presidential directive was issued that repealed limitations against digital assets and introduced business-friendly rules as well as a presidential working group focused on crypto. “The digital asset industry is a vital component in innovation and economic development in the United States, and for 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%. The leading cryptocurrency rose 10% in the hours after the reserve was announced. Market Perspective: Sentiment-Driven Investments Cryptocurrency is sensitive to market sentiment and confidence worldwide, said an industry expert. It’s what is called a speculative investment, an investment which performs well during periods of optimism about the economy and are willing to assume greater risk. “The current government may be pro-crypto, but tariffs and tight monetary policy outweigh positive vibes,” they continued. “This also serves as a stark reminder, especially for those in the sector, that broader economic factors really matter more than political stances.” Volatility Continues In November, bitcoin underwent its most severe decline in price since 2021, pushing its price to less than $81,000. While bitcoin regained a portion of the losses afterward, the start of the final month with a fresh downturn, a six percent fall triggered by a major corporate holder slashing its profit outlook because of falling crypto prices. Its value now hovers near $90,000. Fears of a Prolonged Downturn Some experts are concerned the industry is entering what's termed a prolonged bear market, a period of stagnation or losses. The previous such downturn lasted from late 2021 through 2023. That period witnessed Bitcoin fall approximately 70% in price. “This latest collapse isn’t a change in belief, but rather a confluence of three structural factors: the lingering effects of a $19bn deleveraging event; investors fleeing risk driven by US-China tariff tensions; and, importantly, the potential unraveling of the corporate treasury trade,” explained a lab founder. Link to Tech Stocks Another potential factor impacting the crypto market is the decline in values of artificial intelligence companies. “One of the reasons for the link to the AI cycle is because a lot of bitcoin miners have diversified their energy towards new datacenters,” an expert said. “That negative sentiment tends to sneak into the crypto space.” Long-Term Optimism Remains Amid the worries over a crypto winter, prominent leaders in the crypto space voiced optimism about the long-term value of the currency. A top CEO said “it is impossible” the price of bitcoin would hit zero and that 2025 will be remembered as the time “when crypto went from gray market to a well-lit establishment”. Another noted increased interest from sovereign wealth funds. Some believe this downturn fits the pattern of historical four-year bitcoin cycles , adding that a deeply prolonged crypto winter is not a certainty. “From the perspective at it from traditional bitcoin cycle, we are actually currently in a bear market,” said one analyst. “However, it's clear, despite these major headwinds that are affecting the market, it has held to set a price well above eighty thousand dollars.”
As 2025 draws to a close, the former president's supportive approach to digital currency has failed to be enough to support the sector's advances, once the driver behind market-wide optimism and excitement. The last few months of 2025 have seen an estimated $1 trillion in market capitalization erased from the crypto market, despite bitcoin hitting an all-time-high price above $125,000 in early October. A Fleeting High Followed by a Historic Liquidation The October price peak proved temporary. The flagship cryptocurrency's value plummeted just days later after a declaration of sweeping tariffs on China sent shockwaves across the market in mid-October. Digital asset markets experienced an unprecedented $19 billion wiped out in 24 hours – the largest liquidation event on record. The second-largest crypto, Ethereum, saw a 40% drop in value in the subsequent weeks. Pro-Crypto Policy Collides With Macroeconomic Reality The industry was delivered the pro-bitcoin president it had anticipated during the campaign. Within days of taking office, a presidential directive was issued that repealed limitations against digital assets and introduced business-friendly rules as well as a presidential working group focused on crypto. “The digital asset industry is a vital component in innovation and economic development in the United States, and for 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%. The leading cryptocurrency rose 10% in the hours after the reserve was announced. Market Perspective: Sentiment-Driven Investments Cryptocurrency is sensitive to market sentiment and confidence worldwide, said an industry expert. It’s what is called a speculative investment, an investment which performs well during periods of optimism about the economy and are willing to assume greater risk. “The current government may be pro-crypto, but tariffs and tight monetary policy outweigh positive vibes,” they continued. “This also serves as a stark reminder, especially for those in the sector, that broader economic factors really matter more than political stances.” Volatility Continues In November, bitcoin underwent its most severe decline in price since 2021, pushing its price to less than $81,000. While bitcoin regained a portion of the losses afterward, the start of the final month with a fresh downturn, a six percent fall triggered by a major corporate holder slashing its profit outlook because of falling crypto prices. Its value now hovers near $90,000. Fears of a Prolonged Downturn Some experts are concerned the industry is entering what's termed a prolonged bear market, a period of stagnation or losses. The previous such downturn lasted from late 2021 through 2023. That period witnessed Bitcoin fall approximately 70% in price. “This latest collapse isn’t a change in belief, but rather a confluence of three structural factors: the lingering effects of a $19bn deleveraging event; investors fleeing risk driven by US-China tariff tensions; and, importantly, the potential unraveling of the corporate treasury trade,” explained a lab founder. Link to Tech Stocks Another potential factor impacting the crypto market is the decline in values of artificial intelligence companies. “One of the reasons for the link to the AI cycle is because a lot of bitcoin miners have diversified their energy towards new datacenters,” an expert said. “That negative sentiment tends to sneak into the crypto space.” Long-Term Optimism Remains Amid the worries over a crypto winter, prominent leaders in the crypto space voiced optimism about the long-term value of the currency. A top CEO said “it is impossible” the price of bitcoin would hit zero and that 2025 will be remembered as the time “when crypto went from gray market to a well-lit establishment”. Another noted increased interest from sovereign wealth funds. Some believe this downturn fits the pattern of historical four-year bitcoin cycles , adding that a deeply prolonged crypto winter is not a certainty. “From the perspective at it from traditional bitcoin cycle, we are actually currently in a bear market,” said one analyst. “However, it's clear, despite these major headwinds that are affecting the market, it has held to set a price well above eighty thousand dollars.”