Bitcoin in the new environment — the impact of Trump
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The morning of January 27th was turbulent for the crypto market, with Bitcoin falling 6.5% to below $98,000 before partially recovering. Other cryptocurrencies such as Solana and XRP saw even greater losses, falling 11% and 14% respectively.
Ethereum, the second largest token by capitalization, lost more than 8% of its value amid broader market volatility, Bloomberg reports.
What happened
Experts say that the main reason for the fall of the crypto market is the decree of U.S. President Donald Trump, signed on January 24. The document outlines the establishment of a dedicated working group tasked with developing a regulatory framework for governing digital assets. The working group is to submit its recommendations within six months, including the possibility of creating a cryptocurrency reserve.
Although the order does not guarantee that the United States will begin creating a bitcoin reserve, as Trump promised during his campaign, the move has elicited mixed reactions in the market. Initially, on January 24, market participants took the initiative positively: there was a modest increase in prices. However, the following days brought a sharp correction.
How the market reacts to Trump's executive order
The digital asset market is in limbo. On the one hand, Trump's promise to make the United States the cryptocurrency capital of the world sparked enthusiasm among investors. On the other hand, uncertainty about future regulations and potentially increased government scrutiny triggered a selloff.
Solana and XRP, which rose especially after Trump's victory, were the most vulnerable. Ether, as one of the key tokens, was also unable to avoid significant losses.
Bitcoin: dynamics since November
It is worth noting that since the beginning of November, when Trump won the election, bitcoin has risen by more than 50%. This strengthening was driven by expectations of a liberalization of U.S. crypto policy. Many investors were hoping for a simplified environment which could stimulate capital inflows into the industry.
However, the situation shows how sensitive the market remains to political news. The creation of a working group and the discussion of the possibility of creating a government crypto reserve have led to a reassessment of risks.
Earlier, we reported that Trump's return to the presidency this year could be a turning point for the cryptocurrency market. Its future will depend on the balance between tighter regulatory control and a possible impetus for innovation in the financial sector.
We would also like to remind you that Ukraine is planning to officially legalize digital currency at the state level. According to forecasts, this may happen in the first half of 2025.
