crypto market crashed why?
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Donald Trump's policies and statements create significant volatility in the cryptocurrency markets. While his pro-crypto stance initially triggered a major price surge (the "Trump bump"), his recent tariff threats have led to sharp market downturns, highlighting the market's sensitivity to geopolitical shocks and the evolving correlation between crypto and traditional risk assets
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Key Insights
Initial Surge: After Trump's election win in November 2024, Bitcoin prices soared from around $68,300 to a peak of about $126,000 in October 2025 due to his "crypto president" promises and a supportive regulatory environment.
Recent Crash Trigger: The current market decline was heavily influenced by Trump's recent threats to impose new tariffs on Chinese and European imports, which triggered a broad "risk-off" environment where investors sold off volatile assets like stocks and crypto, flocking to safe havens like gold.
Market Volatility: The market reacts sharply to both positive and negative news from the Trump administration. For example, a delay in tariff threats on January 21, 2026, caused an immediate, albeit temporary, relief rally in Bitcoin prices.
Correlation with Traditional Assets: Recent events challenge the notion of Bitcoin as an uncorrelated "safe haven" asset, as it has shown a strong correlation with the S&P 500 during sell-offs triggered by geopolitical uncertainty.
Conflicts of Interest: Trump's and his family's significant personal financial stakes in various crypto ventures (such as American Bitcoin and World Liberty Financial) have raised conflict of interest concerns, which analysts suggest may influence his policy decisions and market perception.
Policy Outlook: Trump continues to advocate for the U.S. to be a crypto leader, pushing for clear legislation and opposing Central Bank Digital Currencies (CBDCs), which generally fosters optimism within the industry despite short-term volatility.
