Market optimism wanes as legislative deadlock and regulatory flip-flops stall crypto momentum
Bitcoin’s 2025 gains trail previous years as uncertainty surrounds President Trump’s shifting crypto policies and stalled legislation in the U.S. House of Representatives.
Bitcoin, the world’s most valuable cryptocurrency, recently climbed to a new milestone of $120,000, sparking excitement across global crypto markets. Yet, despite the symbolic high, investor sentiment remains cautious. The muted rally, driven largely by inflows into cryptocurrency exchange-traded funds (ETFs), has lost steam amid growing unease over U.S. President Donald Trump’s inconsistent crypto policies.
Diminishing Momentum in 2025
Although bitcoin remains elevated, its 2025 performance tells a more subdued story. As of July 17, the cryptocurrency has posted a 27% gain in U.S. dollar terms—significantly lower than the impressive 122% surge in 2024 and a staggering 153% gain in 2023.
Bitcoin had shown explosive growth in October 2024, leaping 39% in a single month on expectations that Trump’s presidency would usher in a new era of pro-crypto regulation. However, this optimism quickly faded following the unveiling of his administration’s crypto policies in January 2025, including the controversial formation of a strategic crypto reserve comprising bitcoins seized in legal proceedings. Subsequent market correction in February and March underscored investor disillusionment.
Legislative Hurdles Cloud Future Prospects
Despite signs of recovery, sparked in part by the Senate’s recent passage of the GENIUS Act, the broader regulatory landscape remains fraught with uncertainty. The GENIUS Act aims to establish a regulatory framework for stablecoins pegged to the U.S. dollar. Yet, its journey through the House of Representatives has stalled alongside two other critical pieces of legislation.
The CLARITY Act, designed to define crypto assets and assign regulatory oversight, and a separate bill to prohibit the Federal Reserve from launching a central bank digital currency, have both faced resistance. Strikingly, opposition has emerged not only from Democrats but also from within the Republican ranks, forcing lawmakers to make multiple revisions in an attempt to secure consensus.
“The struggle being faced by the Bills has been disappointing to the crypto industry which was among the main sources of funds for the Trump Presidential campaign,” one insider observed, reflecting the growing frustration within the sector.
ETF Inflows Mirror Market Sentiment
The performance of crypto-linked ETFs further illustrates market volatility. The iShares Bitcoin Trust, one of the largest ETFs in the sector, saw an impressive $34.3 billion in inflows over the past year. However, inflows turned negative in February as confidence in Trump’s policy direction began to waver.
The rally that began in late 2024, primarily fuelled by these ETFs, has become increasingly erratic. Other major cryptocurrencies—Ethereum, XRP, and Tether—have mirrored bitcoin’s performance, dominating trading volumes but failing to provide the momentum needed to sustain broader market growth.
Policy Paralysis Dampens Crypto Outlook
While cryptocurrencies continue to trade at elevated levels, the market’s future hinges largely on political developments in Washington. The Trump administration’s much-publicized “crypto week” has thus far generated more confusion than clarity. With key legislation still mired in congressional gridlock, the fate of the crypto rally remains uncertain. For now, investors are treading cautiously—waiting to see whether Trump’s legislative ambitions will solidify or further destabilize an already volatile market.
