As 2025 draws to a close, the former president's supportive stance towards digital currency has not proven to be enough to support the industry’s gains, previously the driver behind broad optimism and enthusiasm. The last few months of 2025 have seen an estimated $1 trillion in market capitalization erased from the crypto market, even after bitcoin reaching an all-time-high price of $126,000 on October 6th.
That record high proved temporary. The flagship cryptocurrency's value tumbled just days later following an announcement of 100% tariffs on China created turmoil across the market on October 12th. The crypto market saw an unprecedented $19 billion wiped out within a day – a record-setting forced selling event on record. Ethereum, endured a 40% drop in value over the next month.
The industry was delivered the supportive administration it had anticipated throughout the election. Shortly of taking office, an executive order was signed rolling back limitations against cryptocurrency while enacting business-friendly rules alongside a federal task force on digital assets.
“Cryptocurrency is a vital component for technological progress and economic development nationally, and for America's global standing,” the order read.
Later in March, the announcement of a digital asset reserve sparked a significant rally in the market, with prices of select named coins soaring by over 60%. Bitcoin itself rose ten percent immediately after the reserve news.
Cryptocurrency reacts strongly to market sentiment and confidence in global markets, said a leading analyst. It is classified as a risk-on asset, an investment which performs well during periods of optimism about the economy and are ready to take on more risk.
“The current government may be pro-crypto, but tariffs and rising interest rates trump positive vibes,” they continued. “This also serves as just a reminder, particularly to those in the sector, that macro forces are far more significant than political stances.”
In November, BTC underwent its most severe decline in value since 2021, bringing the coin’s value to less than $81,000. While bitcoin regained some of that value afterward, December began with another slump, a 6% drop triggered by a major bitcoin holder slashing its profit outlook because of falling crypto prices. Its value currently fluctuates around $90,000.
Market observers are concerned the sector is entering a so-called a prolonged bear market, a period of low activity or losses. The last crypto winter lasted from late 2021 into 2023. That period saw bitcoin slump around seventy percent in price.
“This latest collapse isn’t a change in sentiment, but a collision of several key issues: the aftershocks of a massive leverage washout; investors fleeing risk driven by US-China tariff tensions; and, crucially, the potential unraveling of the corporate treasury trade,” explained a noted economist.
Another potential factor that may have shaken digital assets is the decline in share prices of artificial intelligence companies. “A key reason why bitcoin is tied to the AI cycle is that a lot of bitcoin miners have shifted their power into AI data centers,” it was explained. “That negative sentiment often spills over into crypto.”
Despite concerns over a crypto winter, notable players within the industry voiced confidence about the long-term value of Bitcoin. One executive remarked “there was no chance” Bitcoin's value would hit zero and in fact 2025 would be seen as the time “when crypto went from a fringe market to a mainstream institution”. A separate noted increased investment from institutional investors.
Some believe this downturn is not inconsistent with past four-year bitcoin cycles and that a deeply prolonged downturn may not be imminent.
“From the perspective of a standard market cycle, we are currently in a downtrend,” said one analyst. “But as you can see, even with all of these macros that are affecting markets, bitcoin has still managed to set a price above $80,000.”
