Crypto Market Analysis, ETF & Trump Impact

Crypto markets have recently dropped to their lowest prices in three months, reversing most of the gains following Trump’s U.S. presidential victory. Bitcoin had been holding up relatively well until the $92,000 level, which had been holding as support since November 2024, was broken. The price then rapidly fell to $80,000, where it found support.

Sentiment in the crypto market has been weakened, as signified by the Crypto Fear and Greed Index, which has dropped from a level of 55 (Neutral) to as low as 10 (Extreme Fear) in the last month. It is currently at 34.

Crypto’s high correlation to traditional markets means bitcoin and wider crypto asset prices have also been affected by the uncertainty around tariffs and what they could mean for the U.S. economy in the immediate future.

You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Furthermore, crypto-specific events, such as the fallout from the recent Bybit exchange hack, which has been described as the biggest crypto heist in history, and record outflows from the spot bitcoin ETFs, have also contributed to the recent fall in crypto asset prices.

The recent announcement by Trump that the U.S. would be moving forward with the creation of a strategic crypto reserve provided a boost to crypto asset prices, with bitcoin rallying back up to the $95,000 price level. However, despite Trump pledging to stockpile bitcoin and other crypto assets, it is not fully clear yet how such a reserve will work, how it could benefit taxpayers, and if there will be any future crypto asset purchases. This uncertainty has caused a pullback in the price of bitcoin, which currently stands at around $90,000.

In my opinion, we are now at a crossroads. Loosening financial conditions could mean crypto assets and wider risk asset prices go higher from here. U.S. Treasury Secretary Scott Bessent recently reaffirmed the administration’s plan to bring down interest rates to help struggling Americans. However, further noise around tariffs or the crypto reserve plans not meeting the community’s expectations could cause bitcoin’s price to drop further. We’ll have to see which narrative proves to be stronger over the weeks and months to come.

Generally, we see retracements of 20-35% in bitcoin bull markets before a base is found and the next leg higher begins. The $80,000 level which the price of bitcoin recently fell to is a decline of 28% from the $109,300 all-time high, so there is a chance we may have already seen the low.

On the other hand, if the price were to fall further due to the reasons mentioned above, a 35% decline from the all-time high would put the price at $70,000 before any base is potentially formed and the next leg higher begins.

While I understand that investors may feel fearful due to the large price movements, retracements in the price of any asset class or instrument are normal and expected, and we should remember we’re still significantly up from this time last year.

Investors with ready cash and who have a long-term conviction in bitcoin may see this as an opportune time to add further to their overall holdings.