This year, Bitcoin hit an all-time high – spirits soared as we had a presidential regime that supported crypto (and even launched a meme coin)! Portfolios
pumped and Twitter timelines once again filled with laser eyes as bullish calls for “$200k being the next stop” and “$1m guaranteed this bull run” headlines emerged. But just as quickly, the mood shifted and since then, prices have slumped and many investors
who bought at the peak are now looking at numbers in the red.
So what (the hell) just happened? And more importantly, is the bull run over?
Wait, what
did just happen?
Let’s start with the (orange) elephant in the room: Trump Hopium. Markets were riding high on the narrative that
a pro-crypto Trump administration could spark widespread, sector-defining change. Trump was headlining crypto events, promised crypto chiefs in the White House and there was the fantasy of $1M Bitcoin being purchased for a national reserve. But reality simply
didn’t match the hype. The rally was a textbook case of ‘buy the rumour, sell the news’ – savvy traders saw the wave of optimism, rode it and then bailed before things got bumpy.
To be fair, some progress
has been made. There’s a strategic reserve proposal, a friendlier regulatory tone, SEC cases being dropped and actual
stablecoin legislation on the cards – which is arguably more than anyone expected 12 months ago. But expectations, supercharged by memecoin mania and election-season adrenaline, simply blew past anything policy could deliver and the problem wasn’t that Trump
did nothing – it’s that the market had already priced in a crypto miracle.
We all came into this thinking that the Trump administration would be pro business. Then came the tariffs. To keep things high level: new US tariffs announced
on ‘Liberation day’ were higher and targeted more countries than expected. China was particularly hard hit, however no one (not even close allies) was immune. History tells us tariffs are bad for global trade and generally make everyone poorer. This has triggered
fears not only of a US recession, but a global recession. Because everyone is impacted, the effect has been felt across global markets. Businesses who understand the impact of tariffs are rightly fearful and when business confidence drops, risk appetite
tends to follow and crypto is often one of the first assets to feel this chill.
Suddenly, the story has changed from bullish momentum to bearish caution and investors have moved from ‘risk-on’ to ‘risk-off’, favouring safer bets like
gold and US dollars. Crypto’s Fear and Greed index has been beaten back to Extreme Fear (at this moment) and Google search volume on crypto terms is bouncing
along the bottom with consumers simply tapped out.
Markets melt. You don’t have to.
When the headlines turn red and the charts follow suit, it’s easy to panic. But it’s well worth zooming out.
The crypto market is used to big pullbacks, even during bull runs. The 2017 bull had six drawbacks of over 30% while 2021 had fewer but they were even
larger. And while this correction feels uncomfortable, it’s not unprecedented – we’ve seen this movie before. The reality is that markets move in cycles…they always have and when markets take a hit, everything slows down and recession fears are raised. Central
banks then step in with stimulus and investors start hunting for returns again. That’s when crypto typically gets very interesting – especially for those who’ve stayed calm and positioned themselves for moments like this. Just remember the maxim, it’s always
darkest before dawn.
At Easy Crypto, we’re seeing the signs of consolidation (and not a full blown bear market). Despite the headlines, our trading volumes are holding steady.
We are also seeing heavy buy activity because for some, this is the discount buying opportunity that they were hoping for and dreaming of back in January. Others are cashing out, but right now we can see clearly that buying activity still outweighs selling.
The bottom line is that the market’s breathing, not broken – acknowledging that
things can change rapidly and we are in a period of wild uncertainty and we endure the ‘whiplash’ from changes made by politicians and presidents.
Bitcoin’s not alone in its volatility
While it’s tempting to zoom in on Bitcoin as the bellwether for crypto sentiment, this is bigger than Bitcoin. US equities are down across the board.
Meta, Amazon, you name it – it’s red out there and Bitcoin’s price drop is part of a broader risk-off wave.
Can it reverse? Yes, history says so.
Can crypto decouple from tech stocks? Also yes, again history says so.
Will it happen tomorrow? Probably not.
It’s also worth noting that some coins have actually increased in value recently, despite broader market volatility. For example, XRP (the digital currency
associated with the company Ripple) has risen by approximately 230% since November.This was driven by Ripple and the U.S. Securities and Exchange Commission (SEC) recently settling a long-running legal battle. The SEC had accused Ripple of selling XRP as an
unregistered security which created a lot of uncertainty around the coin. Now that the case has been resolved, investor confidence has returned and pushed the price up significantly (another nod to the fact that pricing can be cyclical.)
Perspective, please: we’re still up
It might not feel like it right now, but zoom out and things start to look better.
If you bought Bitcoin as recently as January last year, you’d still be up ~80% today. That’s not nothing, in fact – in traditional finance terms that
is amazing. Let’s also remember that the 2021 bull run topped out around $64k and that we’re still well above that level now.
This time around, however, it’s becoming clear that this cycle is less about hype and more about good discipline turning into habits. Instead of reading
about crypto, people are using it. Instead of debating ETFs, investors are allocating into them. Discipline is replacing drama and that’s a good thing for everyone.
So… is it over?
Short answer? We don’t know. Many in the know are skewing towards this being a blip; but everyone is guessing.
Better answer? It doesn’t matter – if you’re thinking long-term. Stick to your plan.
Now that tensions are up, having a plan and executing it is even more important. If your plan was to take some of your profits to reduce risk and recover your principal investment, then do that.
If your plan was to buy into any drawdown greater than 25%… you get the idea.
Crypto isn’t dead, it’s just digesting. And in the absence of clearer macro signals – like a defined Trump policy platform, a change on tariff policy, or a turn in the GDP data – we’ll probably
stay in chop mode for a while.
Crypto is volatile. Always do your own research.
