Trumponomics: Cryptocurrency Boom and Bust Explained

The election of Donald Trump as the President of the United States in November 2024 triggered a wave of optimism across financial markets, including the cryptocurrency sector. Investors initially anticipated favorable regulations and support for digital assets, leading to significant price surges in Bitcoin and Ethereum. Bitcoin, the most prominent cryptocurrency, surpassed the psychological barrier of $100,000, reaching an all-time high of $109,164 on Trump’s inauguration day, January 20, 2025. Ethereum, the second-largest cryptocurrency, also recorded remarkable gains. Investors hoped the new administration would implement regulatory measures fostering the growth of digital assets. However, within months of his inauguration, Trump’s trade policies and unpredictable administrative decisions resulted in substantial market downturns.

Unfortunately, the initial optimism quickly gave way to concerns over Trump’s trade policies. The introduction of tariffs on imports from Mexico and Canada, along with threats of escalating trade wars with other nations, affected global financial markets, increasing uncertainty and prompting investors to steer clear of risky assets. As a result, from its January peak, Bitcoin’s value dropped by 28%, reaching $78,222 by the end of February 2025. Bitcoin’s market capitalization shrank by over half a trillion dollars, indicating a deep correction in the cryptocurrency sector.

Early signals from the Trump administration suggested a favorable stance towards cryptocurrencies. The president appointed a special “crypto czar” and established a presidential task force on digital asset markets to develop clear regulatory frameworks. However, the lack of concrete actions and prolonged legislative processes introduced uncertainty among investors. Additionally, discussions regarding the U.S. government adopting Bitcoin reserves remained at a conceptual stage, with no tangible steps taken towards implementation.

Besides political factors, the cryptocurrency market was shaken by major security incidents. In February 2025, the largest hack in history targeted the Bybit exchange, resulting in a $1.5 billion loss in cryptocurrencies, primarily Ethereum. This event undermined investor confidence in the security of digital assets, contributing to further market declines. Ethereum lost 24% of its value, reaching its lowest point since January 2024.

Despite current challenges, some analysts remain optimistic about the long-term outlook for the cryptocurrency market. Financial experts predict that Bitcoin’s value could reach $500,000 before the end of Trump’s presidential term, provided favorable regulations are enacted and global markets stabilize. However, the key factors for sustainable growth include clear regulatory frameworks and enhanced security measures to restore investor trust.

Donald Trump’s administration has significantly influenced the cryptocurrency market. The initial excitement over expected favorable regulations was soon overshadowed by concerns about aggressive trade policies and the lack of concrete legislative actions. Additionally, security incidents like the Bybit hack exacerbated market declines. The future of cryptocurrencies will depend on political stability, regulatory clarity, and strengthened protection mechanisms against cyber threats.