Trump's First White House Crypto Summit: Bitcoin's Plunge Meets Policy Shift

Trump's First White House Crypto Summit: Bitcoin's Plunge Meets Policy ShiftPresident Donald Trump will host the first-ever White House cryptocurrency summit next Friday, further solidifying his publicly declared support for the industry. A White House statement released Friday evening noted that Trump will deliver remarks at the summit, which will include prominent crypto founders, CEOs, investors, and members of the President's Digital Asset Working Group

Trump's First White House Crypto Summit: Bitcoin's Plunge Meets Policy Shift

President Donald Trump will host the first-ever White House cryptocurrency summit next Friday, further solidifying his publicly declared support for the industry. A White House statement released Friday evening noted that Trump will deliver remarks at the summit, which will include prominent crypto founders, CEOs, investors, and members of the President's Digital Asset Working Group. The statement revealed that the summit will be led by venture capitalist and self-proclaimed White House "crypto czar" David Sacks, with management overseen by Working Group Executive Director Bo Hines.

Early in his presidency, Trump signed an executive order establishing a Digital Asset Policy Working Group composed of major government agencies to advise the White House on policy and assess the feasibility of establishing a national Bitcoin reserve. Members include the Treasury Department, Department of Justice, Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC).

During his 2024 presidential campaign, Trump, who once dismissed cryptocurrencies as a "scam," pledged to simplify crypto regulation, appoint industry-friendly regulators, support a stablecoin framework, and establish a Bitcoin reserve. Millions of dollars in campaign donations from the crypto industry flowed into his campaign coffers. While Trump hasn't fulfilled all his promises, his administration's policies, and this summit itself, mark a significant shift in US government regulatory approach towards cryptocurrencies, moving from a previously hawkish stance to a more lenient one following the FTX collapse and other crypto scandals.

Trump himself has ventured into the crypto space, launching a meme coin ahead of his potential return to office and endorsing a project called World Liberty Financial, in which his son is involved. The White House statement added: "The administration is committed to providing a clear regulatory framework that fosters innovation and protects economic freedom."

However, amidst Trump's aggressive push for pro-crypto policies, Bitcoin has experienced a dramatic price drop. This coincides with Trump's tariff threats and broader turmoil within the cryptocurrency industry, contributing to a broader risk-asset pullback. Compounded by a week-long Bitcoin plunge, this puts a significant test on one of Trump's most popular trading strategies betting on Bitcoin.

On Friday, Bitcoin plummeted as much as 7.2%, hitting $78,226, down 28% from its recent high less than six weeks prior. While it saw some recovery later, it closed Friday virtually unchanged. February saw Bitcoin prices fall approximately 18%, representing its largest monthly drop since June 2022.

Some large participants just said at the end of the day, You know what, Im going to throw in the towel, said Zaheer Ebtikar, co-founder of crypto fund Split Capital. I think thats what weve seen over the past week. The sell-off volume is definitely higher than usual, so its hard to pinpoint a specific exchange or location.

This weeks Bitcoin decline has touched technical support levels, closely watched by many traders for signs that the sell-off might be overdone, prompting bargain hunters to step in and at least pause the decline. Bitcoin fell below its 200-day moving average a closely followed long-term trend indicator for the first time since last October. The 14-day relative strength index, a measure of Bitcoin price momentum, fell below levels indicating the asset is considered oversold this week, its lowest since September.

Concerns over trade tensions fueled a broader risk-off sentiment on Friday, with almost all Asian markets declining and European markets dropping further. But cryptocurrencies, highly sensitive to shifts in risk appetite, were among the hardest-hit asset classes.

The Trump Trade's Troubles

The Bitcoin sell-off underscores the dramatic reversal of fortune for one of the most popular Trump trades in global markets: buying Bitcoin on the expectation that Trump's pro-crypto policies would deliver a broad rally. This strategy did work for a time; Bitcoin hit a record high of $109,241 on Trump's inauguration day, January 20.

However, cryptocurrencies have recently come under pressure amid concerns that Trump's hawkish stance on global trade could have widespread negative consequences. Given the macro environment, where we are isnt surprising, said Stefan von Haenisch, head of over-the-counter trading in Asia-Pacific at crypto custodian Bitgo Inc., noting that traders are still waiting for concrete measures from Trump, including the establishment of a Bitcoin reserve.

Investors are now forced to consider just how far Bitcoin, the world's largest cryptocurrency, can fall. Ruslan Lienkha, market manager at crypto platform YouHodler, pointed to technical analysis showing Bitcoin support around $70,000. But he suggested investors shouldn't assume a Bitcoin collapse of that magnitude. Only if negative sentiment dominates the stock market would we see that level, Lienkha said.

Bearish sentiment also hit US Bitcoin exchange-traded funds (ETFs). In February, investors pulled a record $3.3 billion from US spot Bitcoin ETFs, the largest monthly outflow since the fund's launch, as investors sought safer assets amidst heightened geopolitical tensions and persistent inflation concerns.

Trump has made some moves that have pleased crypto bulls, including putting crypto advocates in key positions. The SEC, under former Chair Gary Genslers years-long crackdown, has also concluded investigations into several crypto entities in recent weeks. Trump has stated a desire to make the US "the global crypto capital and the world's Bitcoin superpower." However, Bitcoin's recent plunge and market anxieties over the global economic outlook undoubtedly cast a shadow over this ambitious goal. Whether the White House summit can turn the tide remains to be seen. The summit's outcome and its impact on markets will have profound implications for the future trajectory of cryptocurrencies and the Trump administration's economic policies, undoubtedly becoming a focal point for global financial markets.