As 2025 draws to a close, the cryptocurrency market has faced a severe downturn, erasing earlier gains and challenging the optimism fueled by Donald Trump's pro-crypto stance. Despite bitcoin reaching an all-time high of **$126,000** in October, the last few months have seen **$1 trillion in value wiped from the digital asset market**, highlighting the volatility and macro-economic sensitivities of the sector.

### The October Peak and Subsequent Crash
Bitcoin's price surge to $126,000 on October 6 was short-lived. Just days later, on October 12, Trump's announcement of **100% tariffs on China** sent shockwaves through the market, leading to a massive sell-off. This event triggered the **largest liquidation event on record**, with $19 billion liquidated in 24 hours. Ethereum, the second-largest cryptocurrency, experienced a **40% drop in price** over the following month, and Eric Trump's crypto company, American Bitcoin Corp, saw a similar decline in December.

### Trump's Pro-Crypto Initiatives
Donald Trump, hailed as a pro-bitcoin president, took swift action upon his second term. He issued an **executive order** repealing restrictions on cryptocurrency and introducing favorable regulations, along with a presidential working group on digital assets. In March, he announced a **strategic cryptocurrency reserve**, which sparked a **62% rally** in the market prices of three out of five named coins, with bitcoin rising 10% to $94,164 shortly after the announcement.

<iframe src="https://interactive.guim.co.uk/datawrapper/embed/USgF0/4/" style="width: 100%; height: 400px; border: none;"></iframe>

### Market Dynamics and Expert Insights
Cryptocurrency is a **risk-on asset**, performing better when investors are confident in the economy. Rachael Lucas, head of marketing at BTC Markets, noted that **"tariffs and tight monetary policy outweigh positive vibes"** from the Trump administration, emphasizing that **macro forces matter more than political stances**. In November, bitcoin suffered its **biggest price drop since 2021**, falling below $81,000, though it later recovered somewhat. By December, it hovered near $90,000, still significantly below its peak.

### Fears of a Crypto Winter
Some experts warn the industry may be entering a **crypto winter**, a prolonged period of stagnation or losses. The last such phase from late 2021 to 2023 saw bitcoin slump **70% in price**. Christian Catalini, founder of the MIT Cryptoeconomics Lab, attributed the recent crash to **three structural factors**: the aftershocks of the October leverage washout, a risk-off rotation from US-China tariff tensions, and the potential unraveling of the corporate treasury trade. Additionally, the downturn in **AI stocks like Nvidia** has negatively impacted crypto, as bitcoin miners are tied to AI data centers.

### Long-Term Optimism Amidst the Slump
Despite the downturn, key figures like **Larry Fink** (CEO of BlackRock) and **Brian Armstrong** (co-founder of Coinbase) expressed optimism at a recent conference. Armstrong stated there's **"no chance" bitcoin will go to zero** and that 2025 marks the year crypto transitioned from a gray market to a well-lit establishment. Fink highlighted **legitimate long-term investors**, including sovereign wealth funds, entering the space. Lucas added that this downturn aligns with past **four-year bitcoin cycles** and isn't necessarily a sign of a sustained crypto winter, noting bitcoin has maintained a price above **$80,000** despite macro challenges.

Last few months of the year have seen $1tn in value wiped from the market, despite all-time-high price of bitcoin

Yesterday Bitcoin Articles Digested