Categories: Economy

Bitcoin has erased its gains from the Trump era, as renewed volatility signals deep uncertainty in the crypto market

Bitcoin’s rally from the Trump era has now fully unwound, wiping out all the gains it had made since the 2024 election and stirring fresh anxiety across crypto markets. Analysts warn that with liquidity drying up, prices could remain volatile—and may still have further to fall.

The sell-off has tracked growing unease over inflated tech valuations and uncertainty around the Federal Reserve’s rate cut trajectory. Since late January, when former President Trump tapped Kevin Warsh as the next Fed chair, markets have been jittery. Warsh is expected to shrink the Fed’s balance sheet, a move that dampened demand for bitcoin and other risk assets. Precious metals and cryptocurrencies tumbled that day, and digital assets have swung wildly ever since—falling 20% last Thursday before rallying sharply on Friday.

“This contraction has been underway for several months and remains ongoing, which means it’s likely to persist,” noted Thomas Probst, a research analyst at Kaiko.
“Lower liquidity leads to sharper and more erratic price moves,” he added.

For many, the turbulence raises real questions about what comes next for crypto. Last October saw the largest crypto liquidation event in history after Trump announced new tariffs on Chinese imports—a shock that drained market liquidity and from which it hasn’t fully recovered.
“That flash crash was the pin that popped the leverage bubble,” said Denny Galindo, an investment strategist at Morgan Stanley Wealth Management.

Trump’s crypto-friendly stance had fueled a major rally last year, propelling bitcoin to an all-time high above $125,000 in October. And while his administration moved quickly in 2025 to deliver on some industry priorities—overhauling the SEC’s approach and passing stablecoin regulation—those measures haven’t stopped the recent slide.
Last week, bitcoin slipped below $61,000 for the first time since just before the 2024 election.

Still, some see signs that the worst may be over.
“Several indicators suggest we are very close to a bottom, if we haven’t already found it,” said James Butterfill, head of research at CoinShares. He pointed out that selling by large holders, or “whales,” has started to slow.
“Many investors view this as an opportunity rather than a reason to run for the hills,” he added.

But liquidity remains a concern. Bitcoin’s average market depth—a measure of how easily it can absorb trades without big price swings—has fallen from over $8 million in 2025 to about $5 million today, according to Probst.
That means even modest trades now move prices more than they did before last October’s crash.
“It’s the trend in liquidity that’s truly worrying,” Probst said.

Andrew Moss, head of digital assets research at Jefferies, agreed, noting that market participants are braced for more near-term swings.
“We see few bullish indicators pointing to a bottom,” he said.

Though crypto is still a small slice of global finance, its ties to traditional markets have deepened in recent years—through stablecoin reserves, crypto-related stocks, and bank exposures. During periods of stress, bitcoin now moves more in sync with equities, leaving it increasingly sensitive to macro and geopolitical shifts, Probst explained.

Equities did bounce back on Friday as investors returned to battered tech stocks. Bitcoin climbed more than 10%, reclaiming the $70,000 level.

Much of bitcoin’s earlier surge was tied to Trump’s 2024 campaign promise to create a strategic national bitcoin reserve—a pledge that stirred excitement across the crypto world. While Trump did sign an executive order to form a reserve using seized digital assets, the government hasn’t gone on a major buying spree.
“The reserve was created, but it wasn’t the big moment some were hoping for before the inauguration,” Galindo said.

For now, markets are left weighing whether the Trump-era momentum can reignite—or if thin liquidity and macroeconomic uncertainty will keep crypto on unstable ground.