Key Points
- Trump’s policies and announcements have caused a significant drop in the value of Bitcoin, Ethereum, and XRP.
- Despite the market crash, crypto market capitalization remains 20% above pre-election levels.
The value of Bitcoin, Ethereum, and XRP have suffered a significant decline due to policies and announcements made by President Trump. The total market capitalization of cryptocurrency fell to $2.784 trillion on Wednesday.
Bitcoin’s correlation with the S&P 500 in the 30-day timeframe is 0.75, indicating that its behavior is similar to that of U.S. equities. The introduction of Trump’s policies resulted in a steep correction in the value of cryptocurrencies within the first fifty days of his administration.
Impact of Trumpism on Crypto
U.S. stocks have also experienced a slump, with the S&P 500 down nearly 8% in the past month, lower than its value the day before Trump won the 2024 election. A staggering $4.5 trillion in capital has been wiped from the market, according to the index. This correction is not limited to equities, however.
Cryptocurrencies, known for their high volatility, have seen a sharp decline as traders turn risk-averse and withdraw capital. Despite one of the worst performances of U.S. stocks within the first 50 days of a new administration, the crypto market capitalization is nearly 20% above the pre-election level, even after the correction.
When Bitcoin crossed the $100,000 milestone and hit a new all-time high, Ethereum and XRP also experienced a surge. However, a market-wide decline has resulted in a drop in the top three cryptocurrencies, down nearly 15%, 28%, and 9% in the past month, according to TradingView data.
Market Reaction and Future Predictions
Despite Trump’s pro-crypto executive orders and the announcement of a Strategic Crypto Reserve, traders remain fearful. A February report by Forbes evaluated the impact of Trump’s return to the Presidency on alternative investments like digital assets. The report concluded that the impact depends on policy implementation details, market expectations, and global economic conditions.
Traders are now required to adjust their strategies proactively, trading from headline to headline and anticipating potential changes. These changes may include the inclusion of different tokens in the U.S. Strategic Crypto Reserve, and traders need to prioritize categories of tokens that are likely to receive favorable treatment or have inherent resilience to policy-induced volatility.
The crypto market and top three tokens continued to decline this week after nearly four consecutive weeks of correction. As crypto traders digest Trump’s tariff wars and executive orders, institutions and market participants have turned risk-averse and realized losses in Bitcoin are mounting.
With the debate on whether a Strategic Crypto Reserve would meet the expectations of the crypto community and what the inclusion of Ethereum (ETH), XRP (XRP), Solana (SOL), and Cardano (ADA) means for holders of the token wages on social media platforms, traders now wait and watch for the narrative to unfold.
The $80,000 level remains a crucial support for Bitcoin. A return to the $100,000 milestone could see Bitcoin rally towards its all-time high and test it. However, a decline from $80,000 could push the token to pre-election levels under $70,000. Another 15% drop from the current price level could erase all post-election gains for Bitcoin.
Ethereum price is 30% below its pre-election level, back to the price recorded in November of 2023. Factors such as a lack of institutional interest, concerns regarding changes within the Ethereum Foundation, the liquidation of whales who borrowed stablecoins against their Ether holdings as collateral, and waning interest from large wallet traders have negatively impacted the Ethereum price trend.
XRP, on the other hand, has shown resilience, trading 75% above its pre-election levels. Catalysts like the token’s addition to the U.S. Strategic Crypto Reserve, Ripple executive’s inclusion in Trump’s elite Crypto Summit last Friday, and SEC’s changing stance on litigation against crypto firms have contributed to the gain in XRP price.