The crypto market that surged on Donald Trump’s campaign promise of a friendlier US posture is now back near where it started, after an 18-month round trip that added close to $2 trillion in value and then erased roughly the same amount.
Data compiled by CryptoSlate put the total crypto market value at about $2.4 trillion in October 2024, weeks before the US election.
By November 2024, the market had pushed toward $3.2 trillion as traders priced in a “policy premium,” the expectation that a pro-crypto White House would mean lighter enforcement pressure, clearer rules, and broader access for both retail and institutional investors.
By early October 2025, the market peaked at $4.379 trillion.
As of press time, CryptoSlate’s market cap page showed the global market at about $2.37 trillion after a steep selloff.
Bitcoin, the sector’s bellwether, briefly fell to around $60,000 this week before recovering to about $65,894. Ethereum, the second-largest crypto asset, traded near $1,921 after sliding close to $1,752 earlier in the week.
A pro-crypto pivot in the office
After Trump took office, the administration moved quickly to signal a reset, but those steps proved to be a shift in tone, not an instant fix.
In late January 2025, Trump ordered the creation of a cryptocurrency working group to draft a regulatory framework for digital assets and to evaluate a potential national digital asset stockpile.
The order also targeted a US central bank digital currency, reflecting early emphasis on limiting federal involvement in retail digital money while expanding room for private-sector tokens.
Banking policy also moved. The Securities and Exchange Commission (SEC) rescinded Staff Accounting Bulletin 121, guidance that the crypto and banking industries had argued raised the cost of custodying customer crypto assets.
In March 2025, the Office of the Comptroller of the Currency (OCC) issued Interpretive Letter 1183, reaffirming that national banks may provide crypto-asset custody.
This allowed these institutions to participate in certain stablecoin activities and engage with distributed ledger networks, removing a prior requirement for supervisory nonobjection before proceeding.
At the same time, the Federal Deposit Insurance Corporation (FDIC) rescinded a 2022 notification requirement for FDIC-supervised institutions and clarified that banks may engage in permissible crypto-related activities without prior FDIC approval.
By April 2025, the Federal Reserve withdrew certain guidance on bank crypto-asset and dollar token activities, including rescinding a 2023 supervisory letter that established a nonobjection process for such activities.
Notably, the FDIC and the Fed also withdrew two joint statements on banking organizations’ crypto-asset-related activities.
Meanwhile, a central legislative milestone arrived with stablecoins, the dollar-pegged tokens used widely as settlement rails across crypto markets.
Congress passed, and Trump signed into law, the Guiding and Establishing National Innovation for US Stablecoins Act (the GENIUS Act) on July 18, 2025.
The law established a federal regulatory framework for payment stablecoins, defined categories of permitted issuers, and set requirements and oversight for stablecoin issuance.
Interestingly, stablecoins were not the only target of the Trump administration.
The US House passed the industry-backed CLARITY Act in July 2025, a market-structure bill aimed at creating a clearer federal framework for digital assets and expanding the Commodity Futures Trading Commission’s (CFTC) oversight.
All of these developments helped create an environment in which Bitcoin and the crypto industry thrive.
As a result, BTC’s value reached a new all-time high of more than $126,000, and the broader crypto industry market cap peaked at over $4 trillion.
From peak to retracement, as leverage and flows turned
Since the crypto industry peaked, the market has shed about $2 trillion, with more than $1 trillion lost in the past month.
Market participants and analysts have largely described the latest leg down as a mechanical unwind rather than a repricing of a single headline.
Matt Hougan, chief investment officer at Bitwise, argued that the drawdown should be read as a pileup of forces, not a single culprit. According to him, markets are complex, and pullbacks are usually the result of multiple factors acting in concert.
Considering this, Hougan’s starting point was cyclical, not political. He said long-term investors have been selling to front-run what many expect from crypto’s four-year pattern, three big up years followed by a down year.
The dynamic can become self-fulfilling, he said, because investors who fear the cycle will repeat may decide to take gains early rather than hold through a potential pullback.
While he acknowledged that measurement is imperfect, Hougan estimated that those investors sold well over $100 billion in Bitcoin last year.
At the same time, he described a fading of retail-style “attention” flows that often prop up speculative corners of markets in good times.
Crypto, in his view, has faced stiffer competition for the spotlight, with AI stocks and, more recently, precious metals drawing capital that might otherwise have rotated into the most volatile digital assets.
While those investors can return, they are currently a source of demand that has partially stepped back from the industry.
Meanwhile, Hougan also pointed to how leverage turned this downshift into a cliff. He cited the Oct. 10 $20 billion liquidation episode, which is the largest leveraged blowout in crypto’s history.
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According to him, this was caused by Trump’s surprise announcement of a 100% tariff on all Chinese goods at 5:30 p.m. ET on a Friday, when many traditional markets were closed, and by traders using crypto to hedge risk.
This caused a marketwide sell-off that the crypto market has yet to recover from.
At the same time, Washington’s broader policies and the macro backdrop have impacted Bitcoin.
Hougan cited Trump’s Jan. 30 nomination of Kevin Warsh to be the next chair of the Federal Reserve, a pick he said was viewed as hawkish.
He also flagged a separate source of hesitation within Bitcoin itself, with rising concern among some advocates that the community is not moving fast enough to address the future risk posed by quantum computing.
Hougan said quantum is a long-term risk and a solvable problem, but he argued that until the development community takes concrete steps, a portion of long-term capital will remain cautious.
Finally, he said the pullback has been reinforced by broad risk-off sentiment, pointing to a session in which BTC fell alongside sharp declines in gold and silver, with large technology stocks also down significantly.
In that environment, crypto still behaves like a high-beta proxy for risk appetite, becoming vulnerable when portfolios de-gross.
Who are the winners in the boom and casualties of the bust?
The boom phase rewarded the core plumbing of crypto, businesses that monetize activity when prices and trading volumes rise.
Exchanges and derivatives venues benefited as speculation returned. CoinGecko’s 2025 annual report estimated that centralized exchanges processed $86.2 trillion in perpetual futures volume in 2025, while decentralized perpetuals hit $6.7 trillion.
In a boom, that structure operates like a toll road, with greater volatility bringing higher fees and more liquidations.
Stablecoin issuers also emerged as winners, as they are expected to continue growing even when token prices decline. This is because traders and institutions still need dollar-denominated rails to move cash, settle trades, and park funds during volatility.
In fact, Treasury Secretary Scott Bessent believes these assets will become a crucial buyer of US Treasuries in the coming years as they continue to rapidly expand.
Meanwhile, the bust phase has been harsher on businesses with embedded financial leverage and retail investors exposed to the industry.
Public companies that stockpiled BTC and other tokens as a strategy became a focal point as prices fell.
Shares of Strategy (formerly MicroStrategy), the bellwether of the corporate Bitcoin trade, fell from $457 in July 2025 to as low as $111.27 on Thursday, the lowest since August 2024.
Strategy held 713,502 bitcoin at an average cost of $76,052 per coin and posted a $12.4 billion quarterly loss as bitcoin’s decline forced a repricing of its crypto-heavy balance sheet.
Other listed buyers also fell, including the UK’s Smarter Web Company, Nakamoto Inc., and Japan’s Metaplanet, alongside firms tied to Ethereum and Solana strategies and a company that said it would stockpile a Trump-family token.
That dynamic captures the core contradiction of the cycle.
Trump’s pro-crypto posture helped anchor the post-election bid and validated parts of the political thesis through early executive actions, shifts in banking guidance, and a stablecoin law.
But the market’s surge also accelerated the structures that made crypto more sensitive to macroeconomic conditions, ETF flows, and leverage-driven bubbles. So, when those forces turned, the same “policy premium” that lifted valuations proved easy to unprice.
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