As 2025 draws to a close, the optimistic sentiment that prevailed in the crypto market at the beginning of the year has largely disappeared.
The “Trump Rally” was particularly fueled by Donald Trump’s positive comments about cryptocurrencies, but it has not been able to prevent a sharp backlash in recent months. The digital asset market experienced a loss of around $1 trillion in value in the last quarter of this year, wiping out almost all of the gains from the previous year.
In October, Bitcoin reached an all-time high of $126,000 on October 6th, creating strong optimism in the market. However, this rise was short-lived. President Trump's announcement of 100% tariffs on China on October 12 disrupted risk perception in the global market, and $19 billion was liquidated in the cryptocurrency market within 24 hours. This was recorded as the largest wave of liquidations to date.
According to Rachel Lucas, marketing and communications director at BTC Markets, one of Australia's largest crypto exchanges, cryptocurrencies are highly sensitive to narrative and global market confidence. Lucas said crypto assets fall into the “risk” category and perform better during times when investors are confident in the economic outlook.
“The Trump administration may be welcoming cryptocurrencies, but tariffs and tight monetary policy are overshadowing that positive sentiment,” Lucas said.
“This situation serves as a reminder to crypto investors that macroeconomic factors are more decisive than political positions.”
Some experts are concerned that the sector is entering a new crypto winter, marked by prolonged stagnation and losses. The last cryptocurrency winter lasted from the end of 2021 until 2023. During this period, FTX founder Sam Bankman Fried was tried and convicted, and Bitcoin lost approximately 70% of its value.
Christian Catalini, founder of the MIT Institute for Cryptoeconomics, argues that the current decline is not just a change in sentiment. According to Catalini, the market crash stems from the convergence of three fundamental structural factors. A $19 billion leverage cleanup in October, risk aversion caused by the U.S.-China trade war, and the potential for the strategy of holding cryptocurrencies on corporate balance sheets to be disrupted.
Lucas said that one of the factors shaking up the crypto market could be a decline in AI stocks such as Nvidia. He pointed out that the negative sentiment in the AI sector is also reflected in cryptocurrencies, as some Bitcoin miners are redirecting energy infrastructure to data centers and AI applications.
Despite all these developments, Lucas said the current decline is consistent with Bitcoin's historic four-year cycle and he is not worried about a prolonged winter for the cryptocurrency. “Technically speaking, we are in a bear market,” Lucas said, “but the fact that Bitcoin's price is able to sustain above $80,000 despite all these macroeconomic pressures shows that the market is far from a complete collapse.”
*This is not investment advice.
