‘Crypto Winter’: Why Bitcoin Is Crashing Despite Trump’s Support
Bitcoin, the world’s most popular cryptocurrency, has experienced a significant downturn in its price over recent months, plunging to its lowest point in more than a year. This decline continues even as former US President Donald Trump, who returned to office in early 2025, has indicated strong support for the digital asset and cryptocurrency-friendly policies.
A Steep Price Decline
Bitcoin’s fall began in late January 2026, when its value dropped below $80,000 after soaring to an all-time high of over $127,000 in October 2025. Since then, the price has steadily fallen, reaching below $66,000 on February 5th and hovering around $62,900 the following morning. Overall, Bitcoin is down by roughly 30 percent since the start of the year. Other cryptocurrencies, including Ether, have also suffered, with Ether falling 19 percent in a week to close at $1,854 as of late Thursday.
Drivers Behind the Decline
Market analysts attribute Bitcoin’s price crash to multiple factors, including increased volatility across traditional markets and a decline in institutional demand. A report from CryptoQuant, a global market analytics provider, highlighted that US exchange-traded funds (ETFs) that had been purchasing Bitcoin in 2025 are now selling off their holdings. Deutsche Bank analysts noted that these ETFs saw billions of dollars in outflows monthly since the October 2025 market downturn, with specialized US spot Bitcoin ETFs alone experiencing $3 billion in outflows in January 2026. Adam Morgan McCarthy, product specialist at crypto data firm Kaiko, explained that the drop is tied to waning market interest and reduced trading volumes, which results in lower liquidity. “The crypto market heavily depends on hype-driven cycles where investors buy out of fear of missing out,” McCarthy said. “Right now, that foundation is disappearing, which makes trading more difficult and assets less appealing, leading to a vicious downward spiral.”
This prolonged slump in prices is known as a “crypto winter,” a term denoting an extended period of declining or stagnating cryptocurrency prices. Crypto winters are often impacted by negative macroeconomic trends, regulatory tightening, and shifting investor sentiment.
Precious Metals and Geopolitical Factors
Volatility in the prices of gold and silver has also played a role in shaping market sentiment. In recent weeks, geopolitical instability and expectations of a stronger US dollar caused investors to offload precious metals, which in turn dampened enthusiasm for cryptocurrencies. Although gold and silver briefly surged to record highs last week, prices dropped sharply again this week—gold fell to $4,872.83 per ounce on Thursday and silver to $77.36 per ounce.
Trump’s Crypto-Positive Agenda
Despite the price slump, Donald Trump’s administration has promoted a favorable regulatory environment for cryptocurrencies. At a Bitcoin conference during his 2024 pre-election campaign, Trump hailed the US as the “crypto capital of the planet” and promised to establish a national Bitcoin “strategic reserve.” After taking office in March 2025, he moved forward with plans to include Bitcoin, Ether, and other cryptocurrencies in this reserve.
Additionally, Trump introduced legislative measures, such as the GENIUS Act, aimed at regulating stablecoins—a type of cryptocurrency pegged to fixed assets. Recently, draft legislation was unveiled to provide clear regulatory frameworks for cryptocurrency oversight in the US.
Trump’s personal connections to crypto are exemplified by his family’s ownership of World Liberty Financial (WLFI), which launched USD1, a stablecoin backed by US treasuries, in March 2025. Nevertheless, despite these policy moves and personal investments, external market pressures have outweighed their stabilizing effect on crypto prices.
Historical Context of Crypto Winters
Bitcoin and the wider cryptocurrency market have faced similar downturns in the past. The first major ‘crypto winter’ followed Bitcoin’s peak in December 2017, triggered by stringent regulatory crackdowns in the US, Canada, and elsewhere. Another notable downturn occurred in late 2022 after the collapse of the FTX cryptocurrency exchange, which filed for bankruptcy due to liquidity issues, exacerbating global regulatory interventions.
A recent catalyst for the current downturn was the appointment of Kevin Warsh as Federal Reserve Chair, replacing Jerome Powell. Analysts at Kaiko identified Powell’s announcement on January 28, 2026, to keep interest rates steady, combined with Warsh’s appointment, as a turning point that accelerated the cryptocurrency market’s decline. The market, already fragile from economic uncertainties, reacted sharply to these macroeconomic developments.
What Lies Ahead?
Industry experts suggest that crypto winters typically last about 13 months but caution that this period can feel discouraging. “The current market pullback doesn’t change any of the fundamental qualities of crypto,” said Hougan, a veteran investor. “We expect a strong recovery sooner rather than later. It’s been winter since January 2025, but spring is on the horizon.”
While Bitcoin’s recent price trajectory underscores the ongoing volatility of cryptocurrencies, the combination of evolving regulations, shifting investor sentiment, and macroeconomic forces means that the sector remains dynamic and unpredictable.
Sources: CryptoQuant, Deutsche Bank, Kaiko, statements from Donald Trump and World Liberty Financial, and market analyst reports.