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More than $800bn has been wiped off global cryptocurrency markets in recent weeks, as the enthusiasm that swept the crypto industry after Donald Trump’s election victory last year ebbs away.
The price of bitcoin dropped as much as 3.6 per cent on Wednesday to $85,600, taking its losses over the past month to 15 per cent. Other tokens have suffered even bigger losses as crypto assets are swept up in a broader sell-off in risk assets, and the largest-ever cryptocurrency theft shakes confidence in the industry.
Traders have also grown frustrated that Trump has not moved faster to enact some of the reforms he promised on the campaign trail.
“The slower than anticipated rollout of any major pro-crypto policies has led to disappointment,” said Gadi Chait, investment manager at Xapo Bank.
The nominal value of the crypto industry has fallen $810bn from its high in January, according to CoinMarketCap data.
Investors pulled nearly a billion dollars from bitcoin exchange traded funds on Tuesday, according to Bloomberg data, as the deepening slump sparked a record exodus from the vehicles that helped power crypto prices to record highs late last year. Trump’s barrage of tariffs has also spooked investors, sending them racing out of risky assets including crypto.
“There has been a recalibration of expectations regarding the Trump administration’s crypto stance,” Chait said.
Some traders had hoped that under Trump, the US would begin buying bitcoin and would rapidly enact new rules to encourage large financial institutions to buy crypto.
But the new president’s most high-profile move was launching a so-called memecoin in January. The token’s price has plunged 83 per cent from a brief high, and Trump faced widespread backlash over its launch.
Michael Dempsey, managing partner at venture capital firm Compound, said Trump “dumped memecoins”, paving the way for other politicians to follow suit “and effectively destroyed the market for a few months — at least”.
Recent high-profile scandals are also looming large over the industry.
A memecoin promoted by Argentina’s president Javier Milei earlier this month rapidly plunged in value, leaving investors facing steep losses, while Melania Trump’s memecoin launch has also drawn criticism. Last week $1.5bn of ethereum, the second-biggest cryptocurrency, was stolen from exchange Bybit in the largest hack to date, reigniting worries about the security of digital tokens held by trading venues.
The price of ethereum has fallen 23 per cent over the past month, while solana, the token representing the blockchain that hosts most of the memecoins, has dropped 42 per cent.
“What crypto is digesting right now is the end of the memecoin boom,” said Matt Hougan, chief investment officer at crypto asset manager Bitwise. He added that until institutional interest in crypto returns, “the loss of energy will create a drag on the market”.
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