【MACRO Insight
】Trump effect fades and market confidence shakes - cryptocurrency plummets and evapor

The global cryptocurrency market has experienced a sharp decline recently, with more than $800 billion in market value evaporated in just a few days. This phenomenon is a sign that the enthusiasm that swept the crypto industry after US President Trump won the election last year is rapidly fading. The price of Bitcoin fell 3.6% to $85,600 on Wednesday, and has fallen 15% in the past month. Other cryptocurrencies have suffered even more severe losses. A series of negative events have shaken market confidence, causing crypto assets to be involved in a broader sell-off of risky assets.

Traders have been frustrated with the Trump administration's cryptocurrency policy, as some of the reforms he promised during his campaign have not been implemented as quickly as expected. Some traders had hoped that under Trump, the U.S. would start buying Bitcoin and quickly enact new regulations to encourage large financial institutions to buy cryptocurrencies. However, Trump's most notable move was the launch of the so-called “Trump coin” in January, but the price of the token has plummeted 83% from its peak.

Meanwhile, the cryptocurrency industry has been shrouded in scandals. A meme coin promoted by Argentine President Milley this month quickly depreciated, leaving investors facing huge losses ; and a meme coin launched by First Lady Melania Trump has also been criticized. Last week, $1.5 billion worth of Ethereum, the second-largest cryptocurrency, was reportedly stolen from the exchange Bybit, the largest hack to date, once again raising concerns about the security of digital tokens held by trading venues.

Bitcoin may have more room to fall as risk aversion in the market heats up and the meme coin scandal drags on. On Tuesday, the price of Bitcoin fell to around $86,000, the lowest level since November last year and down more than 20% from its all-time high in January. Data from JPMorgan Chase showed that cryptocurrency ETFs saw outflows of $544 million last week, indicating that market pessimism is spreading. Geoff Kendrick, head of digital asset research at Standard Chartered Bank, warned: “Don't rush to buy the bottom. Bitcoin may fall to as low as $80,000.”

Kendrick previously pointed out that $90,000 is a key support level for Bitcoin, and a break below this level could cause the world's largest cryptocurrency to fall further. In addition, part of the reason for Bitcoin's depreciation is the frenzy in the meme coin market. Although Bitcoin is not directly related to this market, a series of meme coin scandals are undermining investors' trust in the entire cryptocurrency ecosystem. This trend is particularly unfavorable for altcoins, with Solana and Ethereum falling 41% and 28% respectively so far this month.

Although Bitcoin has remained above $90,000, supported by optimism about the Trump administration's support for cryptocurrencies, the appeal of cryptocurrencies has been weakened as the president's promises have failed to be fulfilled and macroeconomic uncertainty has risen. Concerns about tariffs, inflation and high interest rates have hit the cryptocurrency market this year. At the same time, doubts about the United States' dominance in artificial intelligence have exacerbated the market's risk aversion, prompting investors to turn to safer assets. Nic Puckrin, founder of The Coin Bureau, said : “If concerns about tariffs continue to escalate, Bitcoin may fall further in the short term. The key support level will move down to $71,000.”

Cryptocurrency regulation and policy issues will continue to be a major factor driving Bitcoin's gains this year. However, for investors betting that government adoption will be bullish for Bitcoin, the failure of three Bitcoin reserve bills in Montana, North Dakota and Wyoming has brought new uncertainty. “Despite U.S. President Trump's support for Bitcoin, the failure of three state-level Bitcoin reserve bills highlights the political risks,” BRN analyst Valentin Fournier wrote. “Policymakers need to avoid accusations of using taxpayer funds for speculation.”

The sharp drop in the cryptocurrency market reflects the market's disappointment with the Trump administration's cryptocurrency policy and the blow to market confidence caused by a series of negative events. The risk of further decline in Bitcoin prices still exists, and the market's risk aversion and memecoin scandal continue to drag down the market. In the future, the trend of the cryptocurrency market will depend on the macroeconomic environment, regulatory policies, and the overall market sentiment towards risky assets. Investors should remain cautious and pay close attention to market dynamics and policy changes.