Less than a year after pledging to be the first ever ‘crypto president’, Donald Trump has overseen the biggest crash in the history of cryptocurrency.
More than $1.3 trillion has been wiped from the market since he took office on 20 January – the biggest drop over an 11-week period since bitcoin’s inception in 2009.
The latest sell-off comes amid broader market turmoil following Trump’s ‘Liberation Day’ trade tariffs announced last week, which have triggered fears of a global downturn.
But bitcoin’s price slide actually began on the day of his inauguration, retreating from a record high of $109,000 in late January to below $75,000 on Monday.
The world’s leading cryptocurrency is now back to the same level it was at when Trump won the US presidential elections back in November, with the subsequent price rally fuelled by his promise to introduce pro-crypto policies once in the White House.
At the Bitcoin 2024 Conference in Nashville last July, the Republican candidate said he would set up a bitcoin treasury, protect the crypto industry from “Elizabeth Warren and her goons”, and ensure that “all the remaining bitcoin [is] made in the USA”.
Since taking office, however, Trump’s policies have so far only proved damaging to the price of bitcoin and the crypto industry more generally. Even an executive order in March to establish a Strategic Bitcoin Reserve, which he signed ahead of the first White House Crypto Summit, was seen as “subpar” by some.
Agne Linge, head of growth at the digital bank WeFi, told The Independent that investors saw the move as “a trick”, as it did not involve the purchase of any new bitcoin.
The launch of his own meme coin in January has also contributed to a loss of trust in the space, as investors in $TRUMP and $MELANIA suffered a cumulative $2 billion in losses. His backing of a meme coin has complicated regulation int he space and helped legitimise a phenomenon that has seen tens of thousands of new tokens entering the market each week.
Dogecoin, which was the first ever meme coin, has been one of the biggest losers since Trump became president, having lost more than two thirds of its value over the last 11 weeks.
Other leading cryptocurrencies, including Cardano, Ethereum and Solana, have seen their price collapse by more than 50 per cent.
The latest dip, induced by Trump’s recently announced tariffs, could be the beginning of a longer-term down trend, according to some analysts, due to the influence of traditional financial markets.
Asian stocks have suffered their worst drop in decades, while the FTSE 100 index fell to its lowest level in a year on Monday. Billionaire hedge fund investor Bill Ackman, who endorsed Trump last year, said over the weekend that the new tariffs of between 10-50 per cent on all imports to the US could lead to a “self-induced, economic nuclear winter” that could take decades to recover from.
Bitcoin and the wider crypto market typically mirrors the movements of stock markets, as investors look to offload risky assets during periods of economic uncertainty.
“The immediate aftermath has demonstrated once again that digital assets can trade in close correlation with traditional risk markets when volatility spikes,” Javier Rodriguez Alarcon, chief commercial officer of crypto finance firm XBTO Global, told The Independent.
“While the narrative around bitcoin as a hedge against traditional assets market volatility continues to gain traction in many corners, the swift downward move in bitcoin alongside equities illustrates that crypto still trades like any other risk asset in the face of sudden uncertainty for most market participants.”
Despite bitcoin’s sudden price drop, Alarcon and other industry experts pointed to the cryptocurrency’s utility as a long-term store of value.
The cryptocurrency has a finite supply – only 21 million bitcoins will ever exist – leading to comparisons to other limited-supply assets like gold, which is currently near record highs.
“While today’s bitcoin price action does not mirror traditional hedges like gold, that doesn’t invalidate its potential,” Seamus Rocca, executive director at Xapo Bank, told The Independent., who said that bitcoin’s future would not be determined by one person’s economic policy.
“Let’s not feed hysteria and dismiss the long-term value that bitcoin represents after a couple of turbulent days... Bitcoin is still in its early stages, evolving into a digital alternative to gold. It may not fully act like a hedge today, but over the long term, it’s increasingly positioned to fulfill that role.”
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