The cryptocurrency market has experienced a dramatic reversal of fortune in recent weeks, with Bitcoin plummeting 25% from its all-time high as the initial optimism surrounding Donald Trump’s presidency gives way to economic concerns. What began as one of the most successful “Trump trades” has quickly transformed into a sobering reality check for crypto investors.
The Great Bitcoin Selloff
Bitcoin, which reached an unprecedented peak of $109,241 on January 20, 2025—coinciding with Trump’s inauguration—has since experienced a dramatic downturn. On February 28, the cryptocurrency tumbled as much as 7.2%, reaching its lowest point since early November and marking a 27% decline from its record high established less than six weeks ago.
This selloff hasn’t been isolated to Bitcoin alone. The broader cryptocurrency market has suffered similar losses, with Ether, Polkadot, and XRP all dropping more than 7% on Friday. February is shaping up to be Bitcoin’s worst month since June 2022, with losses exceeding 20% if current trends hold through the end of the month.
Tariff Threats Shake Market Confidence
The primary catalyst for this market rout appears to be President Trump’s recent announcements regarding international trade. On Thursday, Trump stated that 25% tariffs on Canada and Mexico would take effect from March 4, dashing hopes that he might reconsider after a previous delay. Additionally, he announced plans for an additional 10% levy on Chinese imports, prompting officials in Beijing to promise “all necessary measures” in response.
These developments have triggered widespread concern about potential trade wars and their impact on global economic stability. Caroline Bowler, chief executive officer of BTC Markets Pty Ltd, drew comparisons to the “crypto winter” of 2022, noting: “The last time we saw sentiment like this was 2022. This tanking can be viewed as a response to macro fears on Trump’s tariffs and geopolitical uncertainty.”
The Rise and Fall of the “Trump Trade”
In the lead-up to and immediately following Trump’s election victory, Bitcoin emerged as one of the most popular “Trump trades” in global markets. Investors flocked to the cryptocurrency based on expectations that the president’s crypto-friendly stance would lead to substantial gains across the sector.
Initially, this strategy proved successful, with Bitcoin reaching unprecedented heights on Trump’s inauguration day. However, the recent downturn highlights how quickly market sentiment can shift in response to broader economic concerns.
“Given the macro environment, it’s not surprising to see we are where we are,” explained Stefan von Haenisch, director of over-the-counter trading in Asia Pacific at crypto custody firm Bitgo Inc. He added that traders are still waiting for Trump to implement concrete measures to support the sector, including a potential Bitcoin stockpile that was discussed during the campaign.
Broader Market Implications
The cryptocurrency selloff coincides with a risk-off sentiment that has affected various markets globally. Friday saw declines across almost all Asian stock markets and European futures. However, cryptocurrencies—which are particularly sensitive to shifts in risk appetite—experienced some of the most severe impacts.
Even traditional markets have shown signs of stress, with the S&P 500 falling this week following tepid U.S. consumer confidence data. These developments have raised questions about the overall economic outlook as the Trump administration implements its policy agenda.
Looking Ahead
For cryptocurrency investors, the current market downturn serves as a reminder of the sector’s inherent volatility and its increasing correlation with broader macroeconomic trends. While the long-term outlook for cryptocurrencies under the Trump administration remains uncertain, the immediate focus has shifted from optimism about crypto-friendly policies to concerns about global trade tensions and economic stability.
As markets adjust to the reality of Trump’s approach to international trade, cryptocurrency investors will be closely watching for any concrete policy initiatives specifically targeted at supporting the digital asset sector. Until then, the Bitcoin rollercoaster appears likely to continue, with sentiment swinging between hope for regulatory support and fear of macroeconomic headwinds.
Whether this represents a temporary correction or the beginning of a more prolonged downturn remains to be seen, but one thing is certain: the “Trump trade” in cryptocurrencies has proven to be far more complex than many investors initially anticipated. Check cryptonewstoday for latest updates
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