The cryptocurrency market is facing a significant correction as Bitcoin, the world’s most prominent digital asset, tumbled below the $71,000 mark on Thursday. This latest slide marks a nearly 20% decline since the beginning of 2026, effectively erasing all the gains made following Donald Trump’s re-election in late 2024.

While Bitcoin reached a historic milestone of $100,000 in December 2024 and soared to an all-time high of over $127,000 last October, it has since struggled to maintain that momentum. The current downturn reflects a broader cooling of the "Trump Trade," as the initial euphoria surrounding a crypto-friendly administration meets the friction of legislative and regulatory reality.

Legislative Gridlock Dampens Market Spirits

A major driver of the recent sell-off is the stalling of a high-profile crypto regulation bill in the US Senate. Initially hailed as a game-changer that would provide clarity and a "light touch" to the industry, the bill has hit a wall due to deep-seated disagreements between traditional banking institutions and cryptocurrency firms. Bankers have expressed concerns over systemic risks and market structure, while crypto advocates fear over-regulation could stifle innovation. This impasse has cast a shadow of doubt over the timeline for federal integration of digital assets.

Ethical Clouds Over World Liberty Financial

The Trump administration’s deep ties to the industry are also coming under intense scrutiny. Representative Ro Khanna announced on Wednesday an investigation into World Liberty Financial, the crypto venture launched by Donald Trump and his sons. The probe follows reports of a $500 million deal in which an Abu Dhabi official allegedly acquired a 49% stake in the firm. Critics and lawmakers are raising questions about potential conflicts of interest and the influence of foreign capital on US digital asset policy, further unsettling investors who were banking on a seamless regulatory rollout.

The Strategic Reserve at a Crossroads

Shortly after taking office, President Trump announced plans for a strategic crypto reserve, intended to include Bitcoin alongside four other major cryptocurrencies. This proposal was a cornerstone of his pledge to make the US the "crypto capital of the world." However, the current price volatility and the stalling of supportive legislation have led some analysts to question the feasibility and timing of such a reserve. The market's "wild swings"—a hallmark of Bitcoin—are once again proving to be a hurdle for institutional and government-level adoption.

Broader Market Contagion

The "crypto winter" chill is not limited to digital tokens. The downward trend in Bitcoin coincided with losses in global equities and commodities on Thursday. Silver saw a dramatic drop of 16%, while major stock indices in Hong Kong and Japan also finished lower. This suggests a broader retreat from risk-heavy assets as investors weigh geopolitical tensions and domestic policy hurdles against their 2026 growth projections.

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