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The cryptocurrency market has faced a sharp downturn in recent weeks, reversing the gains sparked by Donald Trump’s election victory. Initially, his promises of pro-crypto policies ignited investor enthusiasm, but fading optimism and macroeconomic pressures have led to a major sell-off.

Bitcoin and Altcoins Plunge

Bitcoin (BTC), the world’s largest cryptocurrency, has dropped 21% from its January 20 peak, erasing much of the post-election excitement. Ethereum (ETH) has suffered an even steeper decline, falling over 40% since December. Even Trump’s own meme coin—launched just before his inauguration—has crashed by 80% from its January highs.

The global crypto market capitalization has shed nearly $1 trillion, now standing at around $2.76 trillion, according to CoinMarketCap.

What’s Driving the Crypto Crash?

Several factors have contributed to the downturn:

1. Unfulfilled Pro-Crypto Promises: During his campaign, Trump vowed to be the “crypto president,” pledging to overhaul regulations and create a national Bitcoin reserve. While his administration has taken some steps—such as forming a cryptocurrency working group and dropping SEC investigations against major crypto firms—investors were expecting more immediate action. The absence of a concrete plan for a Bitcoin reserve has disappointed the market.
2. Economic and Policy Headwinds:
   • Trump’s announcement of new tariffs on China, Canada, and Mexico has added to economic uncertainty, making investors more risk-averse.
   • The U.S. Federal Reserve’s reluctance to cut interest rates has further pressured speculative assets like Bitcoin.
   • A lack of clarity on future crypto regulations has kept institutional investors cautious.
3. Investor Sentiment in Limbo: Analysts believe that the market is now waiting for a major bullish catalyst—such as clearer regulatory policies, additional Bitcoin ETF approvals, or central banks shifting to a more crypto-friendly stance.

Can Crypto Rebound?

Despite the downturn, some experts remain optimistic about Bitcoin’s long-term trajectory. Standard Chartered analyst Geoff Kendrick maintains a bold prediction that BTC could hit $500,000 before Trump’s term ends. Institutional investors, including hedge funds and sovereign wealth funds, continue to buy into Bitcoin ETFs, suggesting long-term confidence.

For now, the market remains in a phase of recalibration. Investors will be watching closely for signals from the Trump administration and the Federal Reserve to determine whether crypto can stage another comeback—or if the current bearish trend will persist.