‘Crypto Winter’: Why Is Bitcoin Crashing Despite Trump’s Support?
By Priyanka Shankar | Published on 6 February 2026
Bitcoin, the world’s most popular cryptocurrency, has entered a steep decline reminiscent of previous so-called “crypto winters.” This week, Bitcoin’s price dropped to its lowest level in over a year, falling below $66,000 on Thursday afternoon and hovering around $62,900 by Friday morning. This follows a sharp fall that began late January when Bitcoin slid below $80,000—after reaching an all-time peak of more than $127,000 in October 2025. Despite significant political backing and a surge in investor optimism following former US President Donald Trump’s return to the White House last year, Bitcoin’s value is down approximately 30 percent since the beginning of 2026. Analysts and market observers are now exploring the underlying reasons for this dramatic downturn and what it means for the future of cryptocurrencies.
Why Is Bitcoin Falling?
Market volatility is a major factor driving the current Bitcoin crash. Analysts point to a broader sell-off across global stocks amid geopolitical uncertainties and recent fluctuations in the prices of traditional safe-haven assets such as gold and silver. These factors have shaken investor confidence and contributed to a widespread retreat from riskier assets, including cryptocurrencies.
CryptoQuant, a firm specializing in global market analysis for cryptocurrency investors, highlighted this trend in a recent report, noting a marked reversal in institutional demand. US exchange-traded funds (ETFs) that had been buying Bitcoin aggressively last year have shifted to selling, with billions of dollars flowing out monthly since Bitcoin’s downturn began in October 2025. Deutsche Bank analysts emphasized this point, revealing that specialized US spot Bitcoin ETFs experienced outflows exceeding $3 billion in January 2026 alone, following substantial withdrawals of around $7 billion and $2 billion in November and December 2025, respectively. The steady selling pressure signals growing investor pessimism and waning interest from traditional financial players.
Adam Morgan McCarthy, product specialist at Kaiko, a crypto market data provider, explained to Al Jazeera that the fall in Bitcoin prices is also linked to diminished market interest and lower trading volumes. Reduced trading activity lowers market liquidity, making any price movements more extreme. He described cryptocurrency markets as heavily driven by "hype" and fear of missing out (FOMO), which fuels trading volumes. Now that this hype foundation is eroding, the market faces a vicious circle where falling interest leads to decreased liquidity, further price drops, and less appeal for traders.
The Notion of a ‘Crypto Winter’
The current phase is widely described as a “crypto winter,” a term denoting an extended period of price declines or stagnation in the crypto markets. Such winters are often exacerbated by challenging macroeconomic conditions, regulatory tightening, and shifts in investor sentiment.
Recent turbulence in precious metals markets has exacerbated negative sentiment. The price of gold hit record highs approaching $5,595 an ounce in January but plummeted this week to around $4,872. Similarly, silver soared and then sharply dropped to $77.36 an ounce. These swings are attributed to geopolitical instability and expectations of a stronger US dollar, prompting investors to sell off both precious metals and cryptocurrencies.
Other major cryptocurrencies like Ether have also suffered losses, with Ether falling about 19 percent this week, closing near $1,854. —
Trump’s Crypto-Friendly Policies: Why Haven’t They Helped?
Former President Trump’s return to office in March 2025 sparked optimism in the crypto sector. During his campaign and early tenure, Trump portrayed the US as the “crypto capital of the planet” and pledged to establish a national strategic crypto reserve, including Bitcoin, Ether, XRP, Cardano, and Solana.
He also introduced the GENEROUS Act in July 2025, aiming to bring regulatory clarity and consumer protections to stablecoins. More recently, the US unveiled draft legislation intended to define regulatory frameworks for cryptocurrencies, clarifying oversight responsibilities in the sector.
Trump’s personal involvement in crypto, including his family-owned cryptofirm World Liberty Financial’s launch of USD1—a US Treasury-backed stablecoin—added to the political momentum behind digital assets.
Nonetheless, these supportive policies have so far failed to shield Bitcoin and other cryptocurrencies from broader market forces. External pressures like geopolitical risks, macroeconomic uncertainties, and shifts in investor behavior have overshadowed regulatory optimism.
Historical Precedents and Outlook
“Crypto winters” are not new to the cryptocurrency space. A notable winter occurred after Bitcoin peaked in December 2017, followed by a prolonged downturn heavily influenced by regulatory crackdowns worldwide. Another, more recent winter followed the October 2021 peak and the collapse of the FTX exchange in November 2022, which triggered widespread market upheaval.
Kaiko analysts pointed to the recent appointment of Kevin Warsh as Chair of the US Federal Reserve as a turning point accelerating Bitcoin’s decline. Warsh replaced Jerome Powell, who had been criticized by Trump for maintaining higher interest rates. On January 28, 2026, Powell announced that interest rates would remain unchanged, disappointing the crypto market that is highly sensitive to macroeconomic policy and already weakened by previous downturns.
What Lies Ahead for Bitcoin and Crypto Markets?
Industry veterans and market analysts advise patience. As noted by a crypto market specialist, crypto winters typically last around 13 months. The current bearish phase began in January 2025, suggesting that recovery could occur soon.
“There is nothing about the current market pullback that has fundamentally changed crypto,” said one analyst. “We expect the market to come roaring back sooner rather than later. After a long winter, spring is surely on the horizon.”
Investors and observers alike will be closely monitoring how regulatory developments, macroeconomic factors, and geopolitical events unfold in the coming months to gauge the true resilience of Bitcoin and the broader cryptocurrency ecosystem.
Stay informed with Al Jazeera Crypto News for the latest updates on global cryptocurrency markets.