‘Crypto Winter’: Why Is Bitcoin Crashing Despite Trump’s Support?
By Priyanka Shankar – Published on 6 February 2026
The world’s most popular cryptocurrency, Bitcoin, has been experiencing a significant price decline in recent months, raising questions about the resilience of the crypto market even amidst high-profile political backing. Despite former US President Donald Trump’s vocal support for cryptocurrencies and promises of a “crypto-friendly” regulatory environment, Bitcoin’s value has plunged to levels unseen in over a year.
Bitcoin’s Recent Price Collapse
Bitcoin’s price peaked at an all-time high of more than $127,000 in October 2025. However, the euphoria quickly dissipated as the digital asset dropped to about $90,000 by December and continued its downward trajectory into 2026. The last weekend of January marked a notable downturn as Bitcoin’s price fell below $80,000. By Thursday afternoon, it had slipped under $66,000, hovering around $62,900 on Friday morning, marking a decline of about 30 percent since the start of the year.
Ether, the second-largest cryptocurrency, followed a similar pattern, losing 19 percent in value during the past week and settling around $1,854 by Thursday evening.
What’s Driving the Price Decline?
Market analysts point to heightened volatility across several financial markets as a key reason behind Bitcoin’s slump. Global stock sell-offs fueled by geopolitical uncertainties have shaken investor confidence. Additionally, fluctuations in gold and silver prices have compounded market apprehensions.
A recent report by CryptoQuant, a market analysis firm specializing in cryptocurrency, highlighted a significant reversal in institutional demand. US exchange-traded funds (ETFs), which had been major buyers of Bitcoin in 2025, are now offloading their holdings. Deutsche Bank analysts detailed the scale of this sell-off, noting that these ETFs suffered outflows totaling billions of dollars each month since October 2025. Specifically, specialized US spot Bitcoin ETFs experienced outflows exceeding $3 billion in January, following $7 billion in November and $2 billion in December. According to Deutsche Bank, this steady selling illustrates growing pessimism among traditional investors and a waning interest in crypto assets.
Adam Morgan McCarthy, product specialist at crypto data provider Kaiko, told Al Jazeera that dwindling market interest and lower trading volumes have eroded liquidity. The crypto market is heavily dependent on “hype-driven” cycles where investor enthusiasm leads to increased buying—a cycle now reversing. “This leads to less liquidity, so any move higher or lower is exacerbated,” he explained. This self-reinforcing decline, common during periods known as “crypto winters,” makes trading increasingly difficult and less appealing.
The Impact of Macroeconomic and Regulatory Factors
A “crypto winter” refers to an extended phase of declining or stagnant prices in the cryptocurrency market, often triggered by unfavorable economic conditions, regulatory tightening, or loss of investor confidence.
In recent weeks, volatility in precious metals has also shaken markets. After hitting record highs—gold reached nearly $5,595 an ounce and silver almost $122—prices plunged sharply. By late last week, gold had fallen to $4,872.83 per ounce and silver to $77.36. These swings are attributed to geopolitical instability and expectations of a stronger US dollar, prompting investors to divest from precious metals and affecting crypto market sentiment as well.
Further uncertainty was introduced by recent appointments within the US Federal Reserve. Kaiko analysts noted that Bitcoin’s accelerated decline coincided with President Trump’s appointment of Kevin Warsh as new Federal Reserve Chair—replacing Jerome Powell—who had previously maintained steady interest rates. Warsh’s leadership has been perceived as less dovish toward interest rate cuts, which have a direct impact on investment flows into riskier assets like cryptocurrencies.
Trump’s Crypto-Friendly Initiatives: Why Haven’t They Stemmed the Tide?
Donald Trump’s return to the White House last year initially boosted Bitcoin prices due to expectations of regulatory friendliness. At a July 2024 Bitcoin conference, Trump declared the US the “crypto capital of the planet” and vowed to establish a national Bitcoin “strategic reserve” upon re-election. After taking office in March 2025, he announced plans for a strategic crypto reserve including Bitcoin, Ether, XRP, Cardano, and Solana.
In addition, the “GENIUS Act” legislation was introduced in July 2025 to set regulations around “stablecoins,” as well as recent draft legislation aimed at clarifying US regulatory oversight for cryptocurrencies. Trump’s personal stake in the crypto sector, through his family’s ownership of World Liberty Financial (WLFI)—which launched a dollar-pegged stablecoin called USD1—also aligns with his public support.
However, despite these initiatives, external market factors such as macroeconomic volatility, investor behavior shifts, and global uncertainty have proven stronger influences. The structural changes in institutional demand and market liquidity have overshadowed political gestures.
Past Crypto Winters and Outlook for Recovery
The current downturn is not unprecedented. Previous crypto winters followed similar patterns: notably, the collapse after the December 2017 peak—driven by regulatory crackdowns—and the late 2022 slump precipitated by the FTX exchange scandal and subsequent bankruptcy filings.
Kaiko analysts emphasize that crypto markets are highly sensitive to macroeconomic changes. The recent Federal Reserve decisions have marked a “true turning point,” exacerbating price declines.
Despite the gloom, experts remain cautiously optimistic. Veteran investor and analyst Matt Hougan noted that crypto winters typically last about 13 months. He highlighted that the current market sentiment of “despair, desperation, and malaise” mirrors previous downturns but does not alter the fundamental value proposition of cryptocurrencies.
“The end of those crypto winters feels a lot like now… I think we’re going to come roaring back sooner rather than later. It’s been winter since January 2025. Spring is surely coming soon,” Hougan remarked.
Conclusion
While former President Donald Trump’s pro-crypto policies brought initial enthusiasm to the market, Bitcoin’s recent crash underscores how cryptocurrency valuations remain vulnerable to broader financial market dynamics, investor sentiment changes, and macroeconomic conditions. As the crypto winter persists, market watchers will be closely monitoring developments for signs of thawing in the digital asset space.
For more in-depth analysis on cryptocurrency trends and policies, follow Al Jazeera’s ongoing coverage.