Bitcoin, the world’s largest cryptocurrency, has witnessed a steep decline since Donald Trump’s inauguration as the first crypto-friendly U.S. president, with fears mounting that the downturn may continue.
Market uncertainty surrounding geopolitics, the U.S. economy, and the president’s unpredictable policy shifts have driven Bitcoin’s price down more than 13% since January 20, falling from $106,000 to $92,000.
Adding to the pressure, a major security breach last week saw $1.5 billion stolen from crypto exchange Bybit, marking the industry’s largest-ever theft and sparking further concerns among investors.
IG market analyst Tony Sycamore noted that while the stolen funds were primarily Ethereum, Bitcoin’s price could still plummet toward $80,000 in the coming weeks.
“It’s been a bit of a rocky old ride,” he said. “A lot of good news was priced in, and then we started to see some tailwinds replaced by headwinds.
“Bybit’s CEO has assured clients that the exchange has taken out bridging loans and can cover the loss until the stolen assets are recovered. Hmmm.”
Ethereum, the second-largest cryptocurrency, has suffered an even steeper decline than Bitcoin since Trump’s inauguration, dropping 24% from $3,300 to approximately $2,500.
Trump had signaled a crypto-friendly stance before the election, driving a significant rally late last year, and his administration’s appointments have reflected that position. However, Sycamore warned that uncertainty over tariffs, trade policies, and regulatory changes were now affecting market sentiment.
“Do you really want to be at the pointy end of the risk spectrum, which is Bitcoin?” he said. “I don’t know where the next dose of good news comes from – the risk is we start to see some bad news.
“There was hope that we’d come a long way from the Sam Bankman-Fried/FTX [2023 fraud conviction] era, but now it seems people are having second thoughts. There’s certainly some nervous moments out there for the Johnny-Come-Latelys in the crypto space.”
Capital.com senior financial market analyst Kyle Rodda observed that Bitcoin’s recent movements had been “very much driven by narrative and momentum.”
“For most of the past six weeks, it had been stable,” he said. “Bitcoin has been the least volatile that I have ever seen it, and for the first time in its history, it wasn’t moving much.”
However, he added that Bitcoin’s recent downturn could be a reflection of the broader market’s waning risk appetite. The Bybit hack, in particular, has reignited concerns over the security of crypto assets, leading Rodda to suggest a short-term drop towards $70,000 “wouldn’t be surprising.”
Historically, Bitcoin experiences price swings of 30-40% annually, making a deeper pullback likely, Rodda said. “It’s an opportunity for sellers to take profits,” he added, predicting Bitcoin’s long-term growth but warning of potential near-term volatility.
FxPro chief market analyst Alex Kuptsikevich described the current market conditions as resembling a “bouncing ball, getting lower and lower all the time.”
“The market is accumulating risks that we will get a compressed spring effect with a sharp move in one direction in the coming days,” Kuptsikevich said.
