Cryptocurrency markets have taken a steep downturn in recent weeks, wiping out a large portion of the explosive gains seen after President Donald Trump’s election victory.
Bitcoin has fallen nearly 33% from its October highs, landing around $86,340 on Monday. Ethereum, the second-largest cryptocurrency by market value, has dropped even further — sliding 40% since last month.
According to Deutsche Bank strategist Jim Reid, over $1 trillion in total crypto market capitalization has vanished during this decline.
Here’s a breakdown of what’s behind the selloff — and what could come next.
How Much Have Crypto Prices Fallen?
Trump’s election — which he called his rise as the “first crypto president” — initially ignited a massive rally across digital assets.
- Bitcoin surged 40% within weeks, breaking above the $100,000 mark for the first time last December.
- After a dip in early spring, bitcoin hit an all-time high of $126,270 on October 6.
But the recent slide has erased nearly $40,000 from bitcoin’s value, cutting it by roughly one-third. Even with this drop, bitcoin still sits about 25% above its price on Election Day.
Bitcoin is no stranger to volatility.
- In 2022, its value dropped more than 60%.
- Similar steep declines happened in the prior two years during pandemic-era market swings.
Hilary Allen, a cryptocurrency policy expert at American University, told ABC News that crypto’s tendency to crash stems from its lack of intrinsic value.
“Without fundamental value to anchor it, the air comes out every now and then,” she said.
What’s Causing the Crypto Decline?
Experts point to two major forces driving the ongoing selloff:
1. A Broader Market Pullback
Stocks have tumbled in recent days, raising concerns about the economy and the possibility of an AI-driven tech bubble.
- Nvidia — a key supplier of AI chips — has fallen nearly 10% since October.
- The Nasdaq index is down around 4% in the same period.
Bryan Armour of Morningstar explained that tech stocks and cryptocurrencies often fall together because investors treat both categories as high-risk assets.
2. Uncertainty Over Federal Reserve Rate Cuts
Crypto investors had expected further interest rate cuts from the Federal Reserve — which would typically lift asset prices. But persistent inflation has led Fed officials to signal caution.
- The Fed cut rates at its last two meetings.
- Another expected cut in December is now in doubt.
When hopes for cheaper borrowing fade, risk assets like crypto often decline. Armour described the Fed’s policies as “another tile in the mosaic” influencing crypto’s pullback.
Where Is Crypto Headed Next?
Analysts agree on one thing: predicting crypto prices is nearly impossible.
The launch of bitcoin ETFs over the past year has brought more traditional investors into the space, allowing exposure without holding digital coins directly. But even with this expanded investor base, volatility remains extreme.
In November alone, investors withdrew $4.7 billion from crypto-related ETFs.
Interestingly, some funds tied to smaller tokens — like Solana and XRP — still saw inflows.
Armour summed it up simply:
“There’s no way to know where the price goes from here.”
