Author: Steven Ehrlich; Compiled by: BitpushNew

In 2025, Trump gave a series of "gifts" to the cryptocurrency industry.

The U.S. Securities and Exchange Commission (SEC) suspended enforcement actions and investigations into major cryptocurrency exchanges and companies such as Coinbase, Gemini, Uniswap, OpenSea, ConsenSys, etc. The White House issued an executive order aimed at enhancing U.S. leadership in the digital asset industry and expressed its intention to build Bitcoin reserves.

However, none of these measures are enough to stop the recent decline in Bitcoin prices and the overall negative sentiment in the crypto industry. As of writing, the current price of Bitcoin is $84,000, down 18% since Donald Trump’s inauguration, nearly 23% from his all-time highs, and the total market value of cryptocurrencies has fallen by 21%.

Kavita Gupta, founder and general partner of Delta Blockchain Fund, said: "It feels like all the good news in the cryptocurrency space has happened, and the positive progress in the industry seems to be just because of the whim of senior figures, lack of due process and due diligence... The situation may change at any time, and sustainability is questionable."

At present, the three major forces driving the market downturn may bring it further down before they can regain their foothold and start to rebound. In fact, the crypto industry may have to wait until 2026 to see the ongoing bull market momentum again.

There are many reasons for the recent decline, first of all, the behavior of cryptocurrency participants themselves.

For example, the industry has been in a disadvantaged position due to multiple meme coin farces, such as $MELANIA, and later $LIBRA, which even entangled Argentine President Javier Mile in a scandal. Now, meme coin issuance and trading activity across the industry is declining, which raises questions about its long-term sustainability. For example, the daily issuance of new tokens reached a local peak of 66,471 on January 24, just six days after $TRUMP went live. On February 27, the number dropped to 27,741, a 58% drop.

GSR research director Brian Rudick said of the data: "People used to think of meme as the most fair and effective form of speculation in the cryptocurrency space, but $LIBRA shows that it is not the case. Now you see a sharp drop in on-chain transaction volume, [although] meme coin bears the brunt, but this is dragging down the entire cryptocurrency space."

In addition, North Korean hackers' $1.5 billion hacking attack on Bybit (cryptocurrency history)The biggest theft case on the market has once again made people question whether it is safe to put money into cryptocurrencies. "These hacking incidents have led the outside world to believe that even after 10 years of development, the industry is still not really mature."

All these negative emotions within the industry are amplified by the reduction of investors' broader risk appetite.

Usually, new appointments boost consumer confidence, and business leaders initially welcomed Trump's election because of his pro-business thinking. However, multiple new data show that consumer confidence is weakening, possibly due to Trump's threat of imposing 25% tariffs on trading partners such as China and Canada, Mexico and the EU.

The Consumer Confidence Index, the non-profit think tank, reported a third consecutive month of decline in February, hitting its lowest level since August 2021.

The University of Michigan's consumer sentiment survey also showed that consumer confidence has dropped sharply. The report noted: "Consumer sentiment continued the downward trend at the beginning of this month, down nearly 10% from January. This decline is common among age, income and wealth groups."

The report also mentioned: "Expectations for inflation in the coming year rose from 3.3% to 4.3%, the highest since November 2023, and have seen abnormally significant growth for two consecutive months. The current reading is much higher than the 2.3%-3.0% range in the first two years of the epidemic."

Rudick pointed out: "According to the latest data from the CME Fedwatch tool, the market is expected to cut interest rates twice this year. But if these expectations disappear completely due to tariff issues, the decline in traditional markets may exceed cryptocurrencies."

It is difficult to accurately predict how much Bitcoin will fall from now on.

Steve Sosnick, chief strategist at Interactive Brokers, said that even in commodities, Bitcoin is unique. "You know the supply and demand of crude oil, coffee or cocoa. Bitcoin has no intrinsic demand of the same type. It exists purely for speculative or investment purposes."

However, Sosnick pointed out several technical charts that can provide some ideas for the price thresholds that investors should pay attention to.

One of the charts is Bitcoin’s simple 200-day moving average. At current prices, the asset is approaching the first time since a clear breakthrough in mid-October last year. If this happens, which means the asset falls below $80,000, Sosnick believes the next threshold will be the “$60,000 high/$70,000 low range”.

While negative investor sentiment, the market has not yet reached a full-scale panic state according to the S&P 500 Volatility Index (VIX), and the VIX index is still positive for the past 12 monthsWithin the normal range. "VIX is not at extremely high levels, which means we may not be out of the way because when VIX soars, the rebound tends to stop." In the case of Bitcoin, this means it may still fall because investors have not reached the level of extreme panic. For example, when the Bank of Japan raised interest rates and lifted the yen arbitrage trading, the VIX index soared in August; the VIX index is now well below its level.

Given that all these negative forces are affecting the price of Bitcoin, it seems that the cryptocurrency industry may need to wait until 2026 for Bitcoin and the industry as a whole to regain substantial momentum forward. When asked what types of internal or external factors may play a role in the process, there are two answers: strategic bitcoin reserves or legislation that sets rules for the industry once and for all.

While the cryptocurrency community has always wanted to build strategic Bitcoin reserves, the White House executive order is designed to evaluate something different: the Federal Reserve, which will choose to hold the Bitcoin it acquires through law enforcement actions, rather than the strategic reserves, which will buy new Bitcoins. (However, many states are evaluating their own strategic reserves, although few have made meaningful progress.)

Rudick believes that something like Bitcoin reserves may be good for the industry, but that is far from a guarantee: "[Reserves] have always been low in my opinion, but I think Bitcoin is easily rising to $500,000. Even if we don't get it in the form of strategic Bitcoin reserves, I do think it's possible for the United States to create a sovereign wealth fund and increase Bitcoin."

But for Rudick, a more sustainable growth path is to create market structure legislation that allows regulated companies to legally enter the field, but he believes the industry will have to wait until next year to make meaningful progress: "[Legislation] may be until 2026 It will only happen in the year. But the reason this is so important in my opinion is that it is needed for large-scale institutions to enter.”

As evidence, he pointed to a recent statement by Bank of America CEO Brian Moynihan, who said that if the industry’s rules become clearer, his bank that has a reservation about cryptocurrencies will consider launching stablecoins. (At least one source close to the Washington negotiations believe that stablecoin legislation may even be signed in 2025.)

But until then, the industry needs to remain stable to deal with these disadvantages. After all, this drastic fluctuation in investing in cryptocurrencies is part of the huge risk.

Sosnick summarized the current market situation in one sentence: "The market rise is usually like climbing stairs, and when it falls, it is like taking an elevator. Bitcoin took the elevator to the top floor this time, and now took the elevator to the basement. This is an asset with great volatility. If the volatility is right,You are in favor, that's good of course - it's something everyone is happy to accept and enjoy, but when volatility moves in the opposite direction, that's bad. ”