The crypto world is on edge: Why Trump’s become a nightmare for crypto bros
The market is beginning to differentiate and recognize the usefulness of these new digital assets, which are fluctuating in response to Donald Trump’s statements
The start of the year has been turbulent for all types of investments. Bond yields are fluctuating wildly, while stocks are fluctuating, with sharp daily swings. However, cryptocurrencies — given their inherently speculative nature — have claimed the top spot for volatility. Much of this turbulence is fueled by the unfiltered rhetoric of U.S. President Donald Trump regarding tariffs and his ambition to make the United States the “crypto capital of the world.”
This volatility is clearly reflected in Bitcoin’s price movements. On the day of Trump’s election victory, November 5, it was trading at $69,733. It surged to $109,000 in January but has since dropped to around $83,000. Despite a 19% gain since the election, Bitcoin has fallen 23% from its peak.
According to Simon Peters, an analyst at eToro, sentiment in the crypto market is at an all-time low, as reflected in the Crypto Fear and Greed Index, which plunged from 55 (neutral) to 21 (extreme fear) in less than a week. “While it’s understandable that investors feel uneasy about such large movements in dollars, it’s important to remember that corrections are normal for any financial asset,” he notes. “Bitcoin is still up 70% compared to this time last year.”
One of Trump’s most impactful crypto-related initiatives has been the inclusion of Bitcoin — along with Cardano, Solana, and Ripple — in a plan to establish a strategic cryptocurrency reserve. The announcement initially boosted prices but also raised concerns within the Federal Reserve, which cannot legally hold crypto assets.
However, on March 7, Trump signed an executive order formalizing the creation of a strategic Bitcoin reserve, funded by judicial seizures, to be held as a store of value with no plans for liquidation. MarketScreener reports that “public funds cannot be used to purchase Bitcoins, and in the case of other cryptocurrencies, no further acquisitions will be permitted. This was a disappointment to the cryptocurrency community, which expected massive purchases of Bitcoins and other cryptocurrencies.” The restrictions triggered another sharp sell-off in the market.
Cryptocurrencies are starting to consolidate, with Bitcoin leading the way in both value and dominance. Its market capitalization has surged to $1.63 trillion, far ahead of its closest competitor, Ethereum, at $249 billion. Following them are Tether ($143 billion), XRP ($126 billion), BNB ($80 billion), Solana ($65 billion), USDC ($58 billion), and Cardano ($26 billion).
Lapo Guadagnuolo from S&P Global Ratings provides insight into how these cryptocurrencies and their respective functionalities are being perceived in the market. “In people’s minds, some cryptocurrencies seem to have a clearer use,” he explains. “For example, Bitcoin’s success has a lot to do with the fact that it is perceived as digital gold due to its deflationary nature.”
He adds: “Other cryptocurrencies, such as Ether and Solana, are more associated with platform application and smart contract use cases. Others, on the other hand, seem to continue to be regarded as speculative gambles.”
Guadagnuolo hopes that the new U.S. administration will bring more regulatory and legal certainty to the crypto industry, “which can bring more stability and clearer differentiation between the various cryptocurrencies and the different use cases that exist.”
This idea is supported by Marcos Carrera, professor at the International University of Valencia in Spain and head of blockchain at Fujitsu. “The crypto industry has transitioned from a period of pure speculation to a phase of maturity and institutional adoption,” he says. “Projects focused on digital identity, asset tokenization, and the union of blockchain with artificial intelligence are demonstrating solid growth and reveal significant opportunities. For the coming years, the key lies in innovating with purpose, adapting to a changing regulatory environment, and providing solutions that add value to the market and society.”
Exchange-traded funds
Although Trump has become a fervent supporter for the crypto industry, the real momentum came in January of last year with the Biden administration’s approval of spot exchange-traded funds (ETFs) for Bitcoin and Ether. These funds now hold $136 billion in assets and enable any U.S. investor to buy and sell these cryptocurrencies on a daily basis.
The outlook for these products is highly promising. For instance, State Street predicts that crypto ETFs will surpass precious metals ETFs by the end of this year, becoming the third-largest asset class in the exchange-traded fund industry, after stocks and bonds. State Street also expects the U.S. Securities and Exchange Commission (SEC) to approve more crypto-specific ETFs this year.
Trump has also amassed a fortune in cryptocurrencies by launching $Trump, his memecoin (a cryptocurrency derived from a meme or humorous idea), which is hosted on the Solana platform. The cryptocurrency surged to $75 upon its launch, but is now worth just $11. This serves as a clear reminder that this space is still rife with intense speculation, often resulting in significant losses.
In defense of bitcoin
The reluctance shown by major investors such as the Oracle of Omaha, Warren Buffett, regarding Bitcoin is easing. Juan Pablo Mejía Caicedo, professor at Digit Institute and co-founder of Alfa Bitcoin, points out that "while thousands of worthless cryptocurrencies flood the market, Bitcoin remains the true innovation, standing out for its decentralization, security, and global adoption."
According to this expert, in the long term, Bitcoin will continue to strengthen its position as an increasingly recognized store of value, “especially in the face of inflationary currencies and unstable financial systems. Its limited supply and resistance to censorship make it unique.” Moreover, the growing institutional adoption and the development of its infrastructure further solidify its place in the market.
Similarly, Alejandro San Nicolás, professor of the Master’s Degree in Financial Management and Administration at VIU, states that understanding Bitcoin as a store of value has become widely accepted. “In fact, many governments, companies, and millions of individuals are purchasing Bitcoin as a long-term savings strategy. What is somewhat surprising is the commitment to other cryptocurrencies.” He adds: “Trump has spoken of Ethereum as one of his strong currencies, but he has also indicated support for projects like Solana, XRP, and Cardano, which have yet to establish themselves — especially Cardano, which has not really taken off for years."
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