Trump promised a crypto revolution. Why is crypto crashing?

It wasn’t supposed to go this way for the crypto industry.

President Trump got re-elected vowing to make the U.S. “the crypto capital of the world.” Since he retook office, he has appointed regulators known to be friendly with the industry, while the Republican-led Congress has passed legislation that many critics believe goes too easy on the sector.

And at first, crypto soared. The value of bitcoin nearly doubled between when Trump was re-elected in November 2024 and when it reached an all-time high of around $126,000 per coin in October 2025.

That was until it all came crashing down. Bitcoin has tumbled since its peak — and at one point this week dropped to around $60,000, lower than it was when Trump got reelected.

So what happened — and what comes next? Here are three things to know.

Big bets — and big losses

Trump’s reelection and investors’ optimism about a game-changing era for crypto created excitement — but it also led to rampant speculation. Many not only traded cryptos, they also borrowed heavily to scoop up even more of them.

All that borrowing juiced profits when bitcoin and other cryptos were surging. But as soon as the value of bitcoin started falling, the reverse happened: It magnified the losses.

The moment that sparked that decline was on Oct. 10, when Trump threatened to impose an extra 100% tariff on Chinese imports — on top of the 30% already in place. That spooked traders, who dumped a whole slew of investments, from stocks to currencies.

Stocks eventually recovered — and then some. The Dow Jones Industrial Average, for example, hit its latest record high on Friday.

But for crypto, the losses caused by all that borrowing and speculation deeply shook investors, reminding them of the sector’s volatility. And it created a contagion effect, where big declines spooked more and more people into selling.

For crypto critics such as Ben Schiffrin, senior policy director at consumer finance advocacy group Better Markets, the losses have been long in coming.

“Bitcoin is anything but safe,” he says. “It’s the most speculative asset, and I think people are realizing that that’s the case.”

Crypto’s notoriously volatile history

The latest crash is a reminder of the boom and bust cycle that has afflicted the sector throughout its short history.

The crypto industry, for example, entered 2022 brimming with hope, as the pandemic helped spark a surge in trading from people stuck at home, leading to a frenzy that boosted all kinds of speculative investments, from cryptocurrencies to digital tokens called NFTs.

But then a series of events, including rate hikes by the Federal Reserve, ushered in a period of intense volatility that eventually led to the collapse of crypto exchange FTX, which in turn sparked a severe downturn — or “winter,” in crypto parlance. In 2022, the value of bitcoin fell from about $50,000 a coin to under $20,000. Bitcoin didn’t really regain its swagger until late 2024 with Trump’s reelection.

Similarly, in the months leading up to 2018, there was a frenzy of investments on initial coin offerings — in which cryptocurrencies were sold much like how companies sell shares during initial public offerings. After peaking in January 2018, the crypto market crashed.

The push to make crypto more mainstream continues

It’s unclear how long the current slump will last, but for crypto investors there’s still hope because there are some significant tailwinds boosting the sector.

Perhaps the most important is the sea change in the regulatory environment for cryptos.

Last year, Trump picked Paul Atkins, a consultant who has worked with the crypto industry, as his chair of the Securities and Exchange Commission, effectively placing a crypto supporter in charge of the primary federal agency that supervises the financial sector.

Meanwhile, Congress passed the country’s first major crypto legislation, establishing rules for a growing area of crypto called stablecoins — digital currencies that allow for almost instantaneous transfers between parties anywhere in the world.

The moment represented a major legislative victory for the crypto industry, which spent hundreds of millions of dollars in 2024 to elect crypto-friendly lawmakers.

Another major bill that would determine, among other things, which regulator will oversee the sector, has stalled in the Senate, but the crypto industry is still pushing for its eventual passage.

Bitcoin and other cryptos may now be in the midst of a slump, but investors remain hopeful that the Trump administration will continue to lay the groundwork for a crypto revolution.