Cryptocurrency prices have extended their decline as escalating trade tensions and diminishing hopes for further Federal Reserve rate cuts overshadowed a series of pro-crypto announcements from US President Donald Trump last week.
Risk assets, including digital currencies, remain under pressure as concerns grow that tariff disputes and political uncertainty in the United States could hamper economic growth. While US equities suffered a sharp downturn yesterday, Treasuries gained as investors sought safer assets.
“While Trump’s strategic crypto reserve announcement initially drove optimism, the rally quickly unravelled amid aggressive selling linked to worsening macro conditions,” wrote Nikolay Karpenko, director at B2C2.
Bitcoin fell as much as 4.5% to $79,334 (€73,190) yesterday, marking its lowest level since February 28, before slightly recovering. Other major tokens, including Solana, Cardano, and XRP—mentioned by Trump as potential candidates for the US government’s digital asset reserve but omitted from his executive order—also saw significant declines.
Despite Trump’s pro-crypto stance, which included an executive order to establish a US Bitcoin reserve and a separate stockpile of alternative tokens, investor sentiment remains weak. A highly anticipated summit in Washington with industry executives failed to provide the market boost that many had expected. The administration’s decision to capitalise the reserve using cryptocurrencies seized in legal proceedings, rather than new capital infusions, left investors disappointed.
“The market perceived the summit as underwhelming, and top cryptocurrencies dropped after it was revealed that the widely anticipated crypto reserve would only hold existing government holdings,” said Jeff Mei, chief operating officer at crypto exchange BTSE.
Currently, the US government holds approximately $17 billion in Bitcoin and around $400 million in other cryptocurrencies, primarily acquired through asset forfeitures in civil and criminal cases.
While reduced enforcement from the US Securities and Exchange Commission has been viewed as a positive development for the sector, concerns remain over the selection process for the government’s strategic reserve, according to Ari Paul, co-founder of BlockTower Capital.
“The apparent capricious favouritism in the administration’s selection of assets for the strategic reserve – especially after the launching of Trump and Melania coins – is a strong deterrent to investors,” Paul said. “It’s created the impression that the Trump administration is engaged in lobbying-based selection and promotion of ‘insider’ assets, and that the cryptocurrency market today is largely a short-term trading casino.”
Since February, investors have pulled a net $4.4 billion from US Bitcoin exchange-traded funds (ETFs), which had played a significant role in Bitcoin’s record-setting rally last year. The cryptocurrency is currently down 25% from its all-time high of $109,241, while the broader digital asset market has shed more than $1 trillion in value from its peak, according to CoinGecko.
“Only when this tariff war ends and the Fed resumes cutting rates will top cryptocurrencies resume trending towards previous all-time highs,” Mei added.
