Crypto Prices Tumble as Trump-Fueled Euphoria Fades

The crypto market has witnessed a significant downturn in recent weeks, with prices tumbling as the initial euphoria surrounding President Trump's election victory and early crypto-friendly policies begins to fade. The total market capitalization of cryptocurrencies has dropped by over $800 billion, reflecting a broader shift in investor sentiment.



The decline in crypto prices can be attributed to several factors, including the lack of immediate action from the Trump administration to support the crypto industry, overestimation of Trump's positive impact on the market, and the recalibration of expectations as investors face losses. Additionally, the end of the memecoin boom, security concerns, and the limitations of Trump's executive order have further impacted market sentiment.

Despite the initial optimism surrounding Trump's election, investors have become disillusioned as the expected actions have not materialized. The average purchase price of bitcoin ETFs since the U.S. election was around $97,000 per coin, meaning that buyers during that period have collectively lost around $1.3 billion. This loss has contributed to the recalibration of expectations and a more cautious approach among investors.

Moreover, the recent $1.5 billion ethereum heist has reignited worries about the security of digital tokens held by trading venues, further impacting market sentiment. The so-called "end of the memecoin boom" has also created a drag on the market, as the value of memecoins promoted by Trump and other political figures has dropped.



The Trump administration's early moves to support crypto, such as rescinding a 2022 accounting rule that forced banks to treat bitcoin and other tokens as a liability on their balance sheets, initially boosted market sentiment. However, as expectations for further supportive policies waned, institutional investors began to reassess their positions. The recent downturn in the crypto market, despite an altcoin price rally, can be partly attributed to these institutional outflows and the recalibration of expectations regarding Trump's crypto stance.

In conclusion, the crypto market's performance has been significantly influenced by President Trump's policies and market sentiment. While initial optimism and supportive actions contributed to a rally, the lack of immediate action, overestimation of Trump's positive impact, and the recalibration of expectations have led to a downturn in the market. As investors reassess their positions and market sentiment shifts, the crypto market continues to evolve in response to the changing political landscape.