Trump promised a crypto revolution. So why is bitcoin crashing?

A pro-crypto White House and a friendly Congress were meant to usher in a golden age for digital assets. Instead, bitcoin is in a freefall, wiping out nearly a year of gains and raising stark questions about the industry's foundation. The dramatic reversal from a record high of $126,000 to a low of $60,000 this week has left investors reeling and analysts pointing to a familiar cycle of speculative excess meeting harsh economic reality.

The paradox is stark: The political and regulatory environment for crypto has never been more favorable in the U.S. Yet, the market is behaving as if the industry is on the brink of another "crypto winter." This disconnect reveals a deeper truth about the asset class, where political promises can fuel a rally, but market fundamentals—and fear—ultimately dictate the price.

The Anatomy of a Crash

The rally that followed President Trump's November 2024 re-election was fueled by his vow to make the U.S. "the crypto capital of the world." Bitcoin’s value nearly doubled in less than a year. The subsequent collapse, however, was swift and brutal, triggered by a confluence of rampant speculation and geopolitical jitters.

A Crisis of Leverage

The market's rapid ascent created an environment ripe for high-risk behavior. Investors, optimistic about a new era of deregulation, borrowed heavily to maximize their exposure to a rising market. When the tide turned, this leverage became a liability, accelerating the crash.

• Speculative Frenzy: The period between November 2024 and October 2025 saw immense excitement. The belief in a permanent, politically-backed bull run led many investors to take on significant debt to purchase more crypto assets, pouring fuel on the fire.

• The Leverage Trap: Borrowing amplified profits on the way up, but it created a devastating feedback loop on the way down. As prices began to fall, margin calls forced leveraged traders to sell their holdings to cover their debts, which in turn pushed prices down further, triggering more selling.

• The Tariff Trigger: The immediate catalyst for the sell-off was President Trump's October 10th threat to impose an additional 100% tariff on Chinese imports. The announcement sent shockwaves through global markets, prompting a flight from risk assets. While traditional markets like the Dow Jones Industrial Average quickly recovered to hit new record highs, the crypto market did not. The initial shock exposed the fragile, over-leveraged positions within the crypto ecosystem, leading to a contagion of fear.

A Familiar Pattern of Volatility

For seasoned market watchers, the current downturn is a stark reminder of crypto’s notoriously volatile history. The industry has been defined by dramatic boom-and-bust cycles since its inception.

• The 2022 "Crypto Winter": The industry entered 2022 on a high, fueled by a pandemic-era trading surge. However, a combination of rising interest rates from the Federal Reserve and the catastrophic collapse of the FTX exchange plunged the market into a deep and prolonged downturn. During that period, bitcoin’s price plummeted from approximately $50,000 to below $20,000.

• The 2018 ICO Bust: A similar frenzy occurred in late 2017 and early 2018 around Initial Coin Offerings (ICOs), a speculative method for funding new crypto projects. After the market peaked in January 2018, it crashed spectacularly, wiping out billions in value and ushering in another extended bear market.

• The Critic's View: For industry skeptics, this volatility is not a bug but a feature. "Bitcoin is anything but safe," says Ben Schiffrin, senior policy director at the consumer advocacy group Better Markets. "It's the most speculative asset, and I think people are realizing that that's the case."

The Political Push Continues

Despite the market carnage, the crypto industry's political and regulatory fortunes have never been brighter. The groundwork laid by the Trump administration and its allies in Congress remains a significant tailwind, providing a glimmer of hope for long-term investors. It's unclear how long the current slump will last, but the structural changes being implemented in Washington are designed to be permanent.

A Shifting Regulatory Landscape

The single most important development for the industry has been the sea change in Washington's attitude toward digital assets, driven by a concerted and well-funded lobbying effort.

• New SEC Leadership: President Trump’s appointment of Paul Atkins as Chair of the Securities and Exchange Commission was a decisive victory for the sector. Atkins, a former SEC commissioner with a history of consulting for crypto firms, has placed a known industry supporter at the helm of its primary regulator.

• Landmark Legislation: In a major legislative win, the Republican-led Congress passed the country's first comprehensive crypto legislation, creating a federal framework for stablecoins. This bill, which establishes rules for digital currencies pegged to stable assets like the U.S. dollar, was the direct result of hundreds of millions of dollars spent by the industry in 2024 to elect crypto-friendly lawmakers.

The Road Ahead

The market may be in turmoil, but the industry’s push for mainstream integration and regulatory clarity is moving forward.

• Unfinished Business: Another key piece of legislation, which would clarify jurisdictional lines and determine which federal agency has primary oversight of crypto markets, has stalled in the Senate. The industry continues to lobby heavily for its passage, viewing it as a critical step toward legitimacy.

• The Long Game: The current slump is a painful stress test for the market. However, investors remain hopeful that the pro-crypto infrastructure being built by the Trump administration will ultimately foster a more stable and mature market. The "crypto revolution" promised by the President may be delayed by market forces, but the political campaign to make it a reality is far from over.