This drop comes after a period of extraordinary gains. Bitcoin surged to an all-time high of $122,200 in October, fueled largely by optimism around Trump’s pro-crypto stance and expectations that his administration would relax regulatory oversight.
Trump’s Crypto Push: A Major Driver of Earlier Gains
Many investors had been encouraged by Trump’s active involvement in the crypto space. Shortly after returning to the White House in January 2025, he signed an executive order declaring the United States would become the “crypto capital of the planet.” He also launched his own branded cryptocurrency, with profits largely directed to his private businesses, and maintained ties to World Liberty Financial—an investment vehicle owned by the Trump family that invests in other crypto assets.
Under his administration, federal policy has generally shifted in favor of digital assets. Trump signed legislation supporting federal backing of cryptocurrency, disbanded a Department of Justice team focused on enforcing crypto regulations, and oversaw a reduction in enforcement activity by the Securities and Exchange Commission.
However, not everyone has welcomed the president’s approach. In November, Democrats on the Senate Judiciary Committee criticized what they described as Trump’s “pro-crypto agenda,” noting that he had accumulated more than $11bn in crypto holdings and earned around $800mn from crypto transactions since taking office.
A Wider Market Pullback
Bitcoin’s latest decline has intensified a longer-term downward trend. The currency is now down 32% over the past 12 months, moving toward levels last seen in early 2024 and 2021. Other major cryptocurrencies have also fallen sharply, with Ethereum and Solana each down about 37% so far in 2026.
According to CoinGecko, the broader crypto market has lost over $1 trillion in value in the past month alone, and roughly $2 trillion since its peak in October.
What’s Driving the Drop?
Bitcoin is known for volatility, but analysts say this latest slump reflects deeper market dynamics. Deutsche Bank suggested in a recent note that the downturn was “triggered by” Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. Warsh is viewed by some as likely to take a more “hawkish” stance, keeping interest rates higher for longer—an environment that typically dampens riskier assets like cryptocurrencies.
Deutsche Bank also noted that Bitcoin has been trending downward for four months and that broader sentiment toward crypto is increasingly negative. “This steady selling… signals that traditional investors are losing interest, and overall pessimism about crypto is growing,” the bank said. While Deutsche does not expect crypto to disappear, it cautioned that Bitcoin may not return to the highs driven by earlier political enthusiasm, suggesting instead that the asset is moving from speculative frenzy toward a more mature phase where it must establish a defined role.
Is Recovery Likely?
Some industry insiders remain optimistic. William Barhydt, CEO of Abra Capital Management, said he believes Bitcoin will rebound, arguing that the market has seen similar swings before. “I wouldn’t say that it has to rebound, but I can’t see how it doesn’t,” he said, adding that only a major global crisis such as war might prevent a recovery.
Others are less bullish. US investment firm Stifel has warned that Bitcoin could fall as low as $38,000, noting a growing trend in which cryptocurrency prices are increasingly tracking the value of the US dollar.
As the market adjusts, the future of Bitcoin may depend less on political backing and more on whether it can secure a stable role within global finance.