The crypto market that got a huge boost thanks to Donald Trump’s campaign promise of a friendlier attitude in the US is now back close to where it started, after an 18-month tour that added almost $2 trillion in value and then erased about the same amount.
Data collected by CryptoSlate estimates the total market value of cryptocurrencies at around $2.4 trillion by October 2024, weeks before the US elections.
By November 2024, the market had soared 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.
In early October 2025, the market peaked at $4.379 trillion.
As of the time of writing, Crypto Slates The market cap page showed the global market at about $2.37 trillion after a steep sell-off.
Bitcoin, the sector’s bellwether, briefly fell to around $60,000 this week before recovering to around $65,894. Ethereum, the second-largest crypto asset, traded around $1,921 after falling nearly $1,752 earlier this week.
A pro-crypto hub in the office
After Trump came to power, the administration moved quickly to announce a reset, but those steps turned out to be a change in tone and not an immediate solution.
In late January 2025, Trump ordered the creation of a cryptocurrency working group to establish a regulatory framework for digital assets and evaluate a potential national stockpile of digital assets.
The order also targeted a U.S. central bank digital currency, reflecting an early emphasis on limiting federal involvement in retail digital money and expanding the space for private sector tokens.
Banking policy also changed. The Securities and Exchange Commission (SEC) has rescinded Staff Accounting Bulletin 121, a directive that the crypto and banking industries say increased the cost of holding customers’ crypto assets.
In March 2025, the Office of the Comptroller of the Coin (OCC) issued Interpretive Letter 1183, which reaffirmed that national banks may provide custody of crypto assets.
This allowed these institutions to participate in certain stablecoin activities and collaborate with distributed ledger networks, removing a prior no-objection requirement from the regulator before proceeding.
At the same time, the Federal Deposit Insurance Corporation (FDIC) has repealed a 2022 notice requirement for FDIC-supervised institutions and clarified that banks may engage in permitted crypto-related activities without prior approval from the FDIC.
In April 2025, the Federal Reserve withdrew certain guidance on banks’ crypto asset and dollar token activities, including the withdrawal of a 2023 supervisory letter that established a no-objection process for such activities.
Notably, the FDIC and the Fed have also withdrawn two joint statements regarding the crypto-asset-related activities of banking organizations.
Meanwhile, a pivotal legislative milestone came with stablecoins, the dollar-pegged tokens widely used as settlement rails in crypto markets.
Congress passed and Trump signed 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 stablecoins for payments, defined categories of permitted issuers, and established requirements and oversight for stablecoin issuance.
Interestingly enough, stablecoins were not the only target of the Trump administration.
The U.S. House of Representatives passed the industry-backed CLARITY Act in July 2025, a market structure bill that aims to create a clearer federal framework for digital assets and expand oversight of the Commodity Futures Trading Commission (CFTC).
All these developments have helped create an environment in which Bitcoin and the crypto industry flourish.
As a result, the value of BTC reached a new all-time high of over $126,000, and the crypto industry’s broader market cap peaked at over $4 trillion.
From peak to retracement as leverage and flows changed
Since the crypto industry’s peak, the market has lost approximately $2 trillion, with more than $1 trillion lost in the past month.
Market participants and analysts have largely described the latest price drop as a mechanical unloading rather than a repricing of a single headline.
Matt Hougan, chief investment officer at Bitwise, argued that the withdrawal should be read as an accumulation of forces, and not as a single culprit. According to him, markets are complex and declines are usually the result of multiple factors working together.
Considering this, Hougan’s premise was cyclical and not political. He said long-term investors have sold at the leading edge of what many expect from crypto’s four-year pattern, three big years followed by a year down.
The dynamic could become self-fulfilling, he said, as investors who fear the cycle will repeat themselves may decide to book profits early rather than sustain a potential pullback.
While acknowledging that the measurement is imperfect, Hougan estimated that these investors sold more than $100 billion worth of Bitcoin last year.
At the same time, he described a declining retail-style “attention” flow, which often supports speculative corners of markets in good times.
According to him, Crypto has faced stiffer competition for the spotlight, with AI stocks and, more recently, precious metals attracting capital that would otherwise have been converted into the most volatile digital assets.
While these investors may return, they are currently a source of demand that has partially withdrawn from the sector.
Meanwhile, so does Hougan be to how the leverage turned this downshift into a cliff. He cited the October 10 $20 billion liquidation episode, the largest debt crisis in crypto history.
He said this was driven by Trump’s surprise announcement of a 100% tariff on all Chinese goods at 5:30 PM ET on a Friday, when many traditional markets were closed, and by traders using crypto to hedge risk.
This caused a market-wide sell-off from which the crypto market has yet to recover.
At the same time, Washington’s broader policies and macroeconomic backdrop have influenced Bitcoin.
Hougan cited Trump’s Jan. 30 nomination of Kevin Warsh as the next chairman of the Federal Reserve, a choice he said was seen as aggressive.
He also flagged a separate source of hesitation within Bitcoin itself, with some proponents increasingly concerned that the community is not acting quickly enough to address the future risk of 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, some long-term capital will remain cautious.
Finally, he said the pullback has been amplified by broad risk-off sentiment, pointing to a session in which BTC fell alongside sharp declines in gold and silver, while major tech stocks also fell significantly.
In that environment, crypto still behaves as a high-beta proxy for risk appetite, becoming vulnerable as portfolios become less valuable.
Who are the winners of the boom and the victims of the crisis?
The boom phase rewarded crypto’s core, businesses that generate revenue when prices and trading volumes rise.
Exchanges and derivatives platforms benefited as speculation returned. CoinGecko’s 2025 yearbook report It is estimated that the centralized exchanges handled a volume of $86.2 trillion in perpetual futures in 2025, while the decentralized perpetuals amounted to $6.7 trillion.
During a boom, that structure functions 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 if token prices fall. 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 U.S. Treasury bonds in the coming years as they continue to expand rapidly.
Meanwhile, the crisis phase has been tougher for companies with embedded financial debt and for private investors exposed to the sector.
Public companies stockpiling BTC and other tokens as a strategy became a focus as prices fell.
Shares of Strategy (formerly MicroStrategy), the bellwether for corporate Bitcoin trading, fell from $457 in July 2025 to $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 quarterly loss of $12.4 billion as Bitcoin’s decline forced a repricing of its crypto-heavy balance sheet.
Other listed buyers also fell, including Britain’s Smarter Web Company, Nakamoto Inc. and Japan’s Metaplanet, in addition to companies tied to Ethereum and Solana strategies and a company that said it would stockpile a Trump family token.
That dynamic reflects the core contradiction of the cycle.
Trump’s pro-crypto stance helped anchor the post-election bid and cemented 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 around, the same “policy premium” that drove valuations higher turned out to be easy to deprice.