Headline: Trump-era optimism couldn’t stop a late‑2025 crypto rout — $1tn wiped as macro shocks overwhelm policy tailwinds As 2025 closed, the initial euphoria sparked by a pro-crypto White House gave way to a sharp market correction that erased roughly $1 trillion of value from the digital-asset complex. That loss came despite a brief October high for bitcoin and a flurry of administration policies designed to put crypto at the center of U.S. economic strategy. What happened, fast - Bitcoin touched an all-time high of $126,000 on 6 October, only to tumble days later after President Trump announced 100% tariffs on China on 12 October. The announcement triggered a cascade of liquidations — about $19 billion in positions were liquidated in 24 hours, the largest single liquidation event on record. - Ethereum fell roughly 40% over the following month. By November, bitcoin recorded its largest single-month drop since 2021, slipping below $81,000. - The sell-off continued into December: bitcoin lost another 6% after Strategy, the largest holder of bitcoin, cut its earnings forecast. By year-end bitcoin was trading near $90,000 — well above multi-year lows but far below the October peak. - In early December Eric Trump’s firm, American Bitcoin Corp, saw roughly 40% of its market value — about $1 billion — erased. Eric Trump publicly vowed to hold his shares and “ride out the decline.” Policy wins didn’t inoculate markets The crypto industry arrived in 2025 with a political tailwind. Within days of taking office for a second term, President Trump issued an executive order that repealed prior restrictions, introduced new favorable regulations, and established a presidential working group on digital assets. The order explicitly cast digital assets as central to U.S. innovation and international leadership. In March, the administration announced a strategic cryptocurrency reserve that boosted several small‑cap coins: three of the five assets named rose roughly 62% in response, and bitcoin jumped about 10% to $94,164 in the hours after the announcement. Those moves helped cement the narrative that the U.S. was embracing crypto at the federal level. But markets are driven by more than politics. “Cryptocurrency is sensitive to both narratives and confidence in global markets,” said Rachael Lucas, head of marketing and communications at BTC Markets in Australia. “It’s what is called a risk‑on asset… The Trump administration may be pro‑crypto, but tariffs and tight monetary policy outweigh positive vibes. Macro forces really matter more than political stances.” Structural shocks and cross-market contagion Several intersecting forces explain the scale of the late‑year correction, according to industry analysts. Christian Catalini, founder of the MIT Cryptoeconomics Lab, described the crash as a collision of three structural factors: the aftershocks of the $19 billion leverage washout in October; a risk‑off rotation triggered by US‑China tariff tensions; and the “potential unraveling of the corporate treasury trade,” where companies had been parking excess cash into crypto. Another channel of contagion: the pullback in AI-related equities. As Nvidia and other AI stocks came off, negative sentiment bled into crypto. Lucas noted that many bitcoin miners reallocated energy and capital toward data centers and AI workloads, creating new correlations between bitcoin and the AI cycle. Is another “crypto winter” coming? Some market participants worry the industry could be entering a prolonged slump akin to the 2021–2023 “crypto winter” that followed FTX’s collapse and saw bitcoin drop roughly 70%. But opinions differ. At a New York Times conference, Coinbase co‑founder Brian Armstrong said there was “no chance” bitcoin would fall to zero and argued 2025 marked a shift from a gray market to a more established market. BlackRock CEO Larry Fink added that the firm had observed “legitimate long owners investing,” including sovereign wealth funds—evidence of deeper institutional interest. Lucas is relatively cautious but not panicked: “Technically we are in a bear market, but bitcoin has still managed to hold above $80,000 despite a lot of macro pressure.” Bottom line 2025 demonstrated that political backing can move sentiment and catalyze rallies, but it cannot fully offset leverage unwind, geopolitical shocks, or cross‑market risk aversion. The year closed with crypto markets smaller than they were at their October peak, yet still backed by growing institutional participation — leaving the sector positioned between renewed skepticism and the promise of longer‑term adoption. Read more AI-generated news on: undefined/news

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