Bitcoin Loses Trump-Era Gains Amid Crypto Market Volatility and Lingering Uncertainty
By Hannah Lang and Elizabeth Howcroft, Reuters — February 7, 2026
Bitcoin has recently relinquished all the significant price gains it made since the election of former U.S. President Donald Trump in late 2024, as the cryptocurrency market grapples with reduced liquidity and heightened volatility. Experts suggest that these conditions are likely to persist in the near term, fueling ongoing uncertainty about the digital currency’s outlook.
Market Dynamics and Price Declines
Bitcoin’s decline is closely linked to a shrinking market depth—the measure of available liquidity at current prices—which has fallen sharply from over $8 million to about $5 million since October 2025. This reduction in liquidity means that even modest trading volumes can cause disproportionately large price swings, contributing to erratic market behavior.
Thomas Probst, a research analyst at crypto data provider Kaiko, noted, “This contraction has been underway for several months and remains ongoing, suggesting it is likely to persist for some time. Reduced liquidity translates into sharper and more erratic price movements.”
Since its peak above $125,000 in October 2025—reached amid a surge driven by the Trump administration’s pro-crypto stance—bitcoin prices have tumbled. On February 5, bitcoin dipped below $61,000, marking its lowest level since a month before Trump’s election. The cryptocurrency briefly rebounded above the $70,000 mark on Friday, bolstered by a positive response in global equity markets that calmed investor nerves after a tech selloff.
The Trump Effect and Crypto Policy
The Trump presidency initially propelled bitcoin to new heights, thanks in part to the administration’s welcoming approach towards cryptocurrencies. Campaign promises included bold proposals such as establishing a strategic bitcoin reserve and regulatory reforms favorable to digital assets.
Trump’s administration rapidly enacted measures addressing the industry’s regulatory concerns, including a revamped U.S. Securities and Exchange Commission framework and legislation overseeing dollar-pegged stablecoins. Trump himself is involved in various crypto ventures, contributing to the perception of a crypto-positive environment.
However, despite these supportive actions, some of the anticipated benefits, such as a large-scale government bitcoin stockpile purchase, have yet to materialize. Morgan Stanley strategist Denny Galindo commented, “The bitcoin reserve was created, but it wasn’t the big moment some hoped for before the inauguration.”
Macroeconomic Pressures and Market Events
Bitcoin’s sharp volatility reflects broader macroeconomic uncertainties. Investor concern has been fueled by high tech valuations and unpredictability around the U.S. Federal Reserve’s interest rate policy, especially following the appointment of Kevin Warsh as Fed chair. Warsh’s expected focus on shrinking the Fed’s balance sheet has stoked fears of reduced demand for bitcoin as a non-traditional asset.
Moreover, the crypto market endured a historic liquidation event last October after the Trump administration imposed new tariffs on Chinese imports. This event drained significant liquidity from the sector, effects of which continue to impact trading dynamics.
Andrew Moss, head of digital assets research at Jefferies, observed, “We see few bullish indicators that suggest we may be approaching the bottom,” highlighting market participants’ cautious stance amid ongoing risks.
Signs of a Possible Bottom and Investor Sentiment
Despite recent setbacks, some analysts speculate that bitcoin may be nearing a price floor. James Butterfill, head of research at crypto asset manager CoinShares, pointed out that selling by "whales"—investors holding large bitcoin quantities—has started to abate, signaling reduced downside pressure. He also noted that many investors might view current prices as a buying opportunity.
“There are several things signifying that we are very close to a bottom, if not having achieved it,” Butterfill stated. “I think a lot of investors are seeing this as an opportunity, rather than running for the hills.”
Crypto’s Growing Integration with Mainstream Finance
While cryptocurrencies still constitute a relatively small slice of global financial markets, their intersections with traditional finance are expanding. Increased exposure via stablecoin reserves, crypto-linked stocks, and bank crypto holdings have made bitcoin and similar assets more sensitive to macroeconomic and geopolitical developments.
Bitcoin now often moves in tandem with equities during market stress, underscoring its growing correlation with mainstream assets.
Conclusion
Bitcoin’s rally under the Trump administration has given way to a challenging period marked by volatile trading and diminished liquidity. While policy support initially boosted sentiment, investors now face an array of uncertainties—from Fed policy and tariff impacts to liquidity constraints—that cloud the near-term outlook.
Nevertheless, cautious optimism remains among some market participants who believe that bitcoin could be approaching a stabilization point, setting the stage for a potential recovery in 2026. —
Reporting by Hannah Lang and Elizabeth Howcroft; Editing by Lananh Nguyen and Anna Driver
© Reuters 2026