Bitcoin Plunges 28% After Trump's Inauguration: Crypto Market Sees Trillion-Dollar Wipeout Amid Policy Uncertainty

Bitcoin Plunges 28% After Trump's Inauguration: Crypto Market Sees Trillion-Dollar Wipeout Amid Policy UncertaintyOn January 20, 2017, Donald Trump was inaugurated as President of the United States. Bitcoin, having reached an all-time high of $109,241 that day, was briefly seen as a star asset of the "Trump trade

Bitcoin Plunges 28% After Trump's Inauguration: Crypto Market Sees Trillion-Dollar Wipeout Amid Policy Uncertainty

On January 20, 2017, Donald Trump was inaugurated as President of the United States. Bitcoin, having reached an all-time high of $109,241 that day, was briefly seen as a star asset of the "Trump trade." However, this short-lived triumph was quickly shattered. In less than six weeks, the price of Bitcoin plummeted 28%, falling to $78,226, wiping out a staggering $1 trillion from the cryptocurrency market capitalization. This sudden downturn caught countless investors off guard, plunging market sentiment to freezing point and leaving a trail of losses.

The sustained decline in Bitcoin's price began immediately following Trump's inauguration. February saw a staggering 18% monthly drop, the largest single-month decline since June 2022, further intensifying the turmoil in the crypto space. The downward trend accelerated in the final week of February, with intraday losses reaching 7.2% on Friday, closing at $78,226 a 28% drop from its peak. The spreading bearish sentiment also severely impacted the US spot Bitcoin ETF market. February witnessed a record $3.3 billion net outflow from US Bitcoin ETFs, the largest monthly withdrawal ever recorded, clearly indicating growing investor apprehension about the market's future.

Zaheer Ebtikar, co-founder of SplitCapital, commented, "Some big players are exiting, increasing the sell pressure significantly." This succinctly summarized the market situation: massive capital flight exacerbated the downward price pressure. Media analysis widely attributed Bitcoin's plunge to the global risk-off sentiment triggered by Trump's tariff policies. The Trump administration's announcement of tariffs on several countries fueled trade war anxieties, causing Asian and European stock markets to plummet. As a high-risk asset, the cryptocurrency market was inevitably hit hard.

Stefan von Haenisch, Head of APAC OTC Trading at Bitgo Inc., noted, "In the context of turbulent macroeconomic conditions, the Bitcoin decline was expected. Investors were anticipating Trump to fulfill previous promises regarding Bitcoin reserves, etc." His statement revealed the anxiety among market participants stemming from the uncertainty surrounding Trump administration policies. Investors craved clear policy signals to guide market expectations and stabilize confidence.

Technically, Bitcoin's decline appeared overextended. The price had fallen below the 200-day moving average for the first time since October of the previous year. Simultaneously, the 14-day Relative Strength Index (RSI) plunged into oversold territory, reaching its lowest point since September of the previous year. These technical indicators suggested that Bitcoin's price might have already reached bottom.

Ruslan Lienkha, Market Manager at YouHodler, pointed out that, based on technical analysis, $70,000 was the next crucial support level. However, he emphasized that Bitcoin would only likely reach this level if the stock market remained consistently weak. Agne Linge, Head of Growth at WeFi, believed that the "fear and greed index" having fallen to 21 indicated extremely fragile market confidence, with tariff issues remaining a key variable influencing market trends.

The market awaited crucial signals. On March 7, the White House was to hold its first cryptocurrency summit, with President Trump scheduled to deliver a speech. The entire market was holding its breath, anticipating policy signals from Trump's summit, hoping to glean clues about the future market trajectory. This summit was crucial for stabilizing market confidence and boosting investor sentiment. The Trump administration's policy direction would directly impact the future of Bitcoin and the entire cryptocurrency market.

The initial surge and subsequent crash of Bitcoin during the early days of Trump's presidency vividly illustrated the high-risk nature of the cryptocurrency market and its sensitivity to macroeconomic policies. The dramatic price volatility served as a wake-up call for investors: investing in cryptocurrencies requires careful risk assessment, close monitoring of macroeconomic changes, and high sensitivity to government policies to succeed in the volatile market. This event reaffirmed that the cryptocurrency market is not an isolated island independent of traditional financial markets; its trajectory is intrinsically linked to global economic conditions and government policies. Going forward, investors need to maintain rationality and continuously monitor relevant policy developments. The stance adopted by the Trump administration at the summit and its response to market concerns would directly determine the short-term direction of Bitcoin and the entire cryptocurrency market. The market would remain in a wait-and-see mode until the summit concluded and clear signals were released. This would be a crucial game affecting the future of the entire cryptocurrency market. All participants awaited these crucial policy signals, hoping they would bring market stability and predictability, thus reducing volatility and uncertainty. Regardless of the outcome, this Bitcoin crash provided a valuable lesson, reminding us to invest cautiously and rationally assess market risks.