‘It Sucks’: Crypto Faces Harsh Reality as Trump’s Second Year Begins
By Declan Harty | POLITICO | February 6, 2026
Washington, D.C. — The cryptocurrency market is experiencing a sobering downturn just as President Donald Trump embarks on his second year in office, casting doubt over what once appeared to be a new golden era for the digital asset industry under his leadership.
Following Trump’s return to the White House with pledges to invigorate the cryptocurrency sector by appointing more industry-friendly regulators, reducing enforcement measures, and establishing clearer market rules, the crypto market initially flourished. Bitcoin, the flagship cryptocurrency, surged 35 percent in 2025, reaching an all-time high of over $126,000 in October.
However, the optimism has sharply faded. The market is now enduring its most severe decline since the 2022 crash. Bitcoin’s value plummeted by nearly 50 percent from its October peak to just over $60,000 in late January, wiping out all its gains since Trump’s election. Although it rebounded slightly to around $70,000 by midday Friday, the rapid fallout is unsettling investors.
Nic Carter, founding partner at Castle Island Ventures, reflected the bleak mood in the crypto community, stating, “I’ve never seen people so dispirited about the crypto industry before, even at the lowest lows. Psychologically, this feels really hard for people to handle.”
This week’s plunge underscores the inherent volatility of cryptocurrencies, which have historically seen wild price swings. However, it also serves as a stark warning of the risks involved, not only for investors but also for policymakers like Trump, who have embraced crypto’s potential.
The industry, which invested heavily in political influence by donating millions to crypto-supportive candidates and lawmakers—particularly Republicans—had hoped for regulatory relief and clearer guidelines. The crypto-friendly super PAC Fairshake has amassed over $190 million ahead of the upcoming midterm elections, seeking to protect and expand the sector’s influence.
Yet the market slump has already inflicted damage on some of the crypto industry’s key players. Strategy, led by Michael Saylor and known for amassing significant crypto reserves to boost its stock, reported a staggering net loss of $12.4 billion in the final quarter of 2025. Gemini Space Station, founded by MAGA advocates Tyler and Cameron Winklevoss, announced plans to cut up to 200 jobs globally and exit markets including the UK, EU, and Australia. Billionaire investor Michael Novogratz’s Galaxy Digital also disclosed a nearly $500 million loss in Q4, far worse than anticipated.
Despite these setbacks, crypto billionaires remain bullish on Trump’s support for the industry. Saylor emphasized on Strategy’s earnings call, “I don’t think you can underestimate the importance of having support for the industry and digital capital at the very top of the political structure. We have a bitcoin president, and he’s intent upon making America the bitcoin superpower, the crypto capital of the world and the leader in digital assets.”
The White House reaffirmed its stance, with spokesperson Kush Desai stating, “Volatility in a free market in which the government does not set prices is not going to change the Trump administration’s commitment to ensuring American dominance in cryptocurrency and other cutting-edge technologies of the future.”
Meanwhile, lawmakers in Congress continue to push for legislation that would establish regulatory guardrails and designate oversight responsibilities regarding cryptocurrencies. At a recent hearing held amid the market downturn, some Democrats indicated a willingness to move forward with stalled crypto bills, reflecting the industry’s enduring influence in Washington.
However, the broader financial markets have also felt the strain. Technology stocks have declined recently amid concerns about the labor market, artificial intelligence investment, and interest rate trends. Over the past week, the tech-heavy Nasdaq 100 index fell nearly 4 percent, while the S&P 500 dropped 2 percent, suggesting a widespread retreat from speculative assets, cryptocurrencies included.
Steve Sosnick, chief strategist at Interactive Brokers, noted, “There’s a huge unwind in a wide range of speculative trades, certainly cryptocurrencies. When you have very crowded trades, it can get very messy when the psychology causes people to all head for the exits at the same time.” He described the recent uptick in bitcoin prices as a “bear market rally” likely driven by bargain-seeking investors, though he cautioned it "just scratches the surface."
Optimists like Rob Hadick, a general partner at crypto venture firm Dragonfly, argue that fundamental aspects of the market remain strong, highlighting stablecoins’ widespread use and growing traditional finance interest in crypto.
Still, the steep price drops present risks. Companies that bought large quantities of crypto tokens hoping to boost their valuations might be forced to sell if the slide continues, exacerbating downward pressure, Sosnick warned, calling these firms “digital asset treasury companies” that “added gasoline to a flammable situation.”
Some commentators are even reevaluating bitcoin’s status in the global financial system. Originally designed by the mysterious Satoshi Nakamoto as “digital gold” and an alternative to the U.S. dollar, bitcoin has underperformed relative to physical gold, which has appreciated significantly in recent months.
“It’s premised on the apocalypse. And now that the Book of Revelation is here, bitcoin isn’t doing what it was supposed to do,” Carter remarked grimly. “The rapture didn’t happen, we’re just stuck here on Earth and it sucks.”
As President Trump continues to advocate for cryptocurrency advancement, the market’s volatility serves as a potent reminder of the sector’s unpredictable nature, the challenges facing investors, and the balancing act policymakers must navigate amid rapid innovation and financial risk.
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Filed under: Wall Street, Bitcoin, Cryptocurrency, Donald Trump, Finance & Tax