A crypto market crash happened this year despite having Donald Trump at the White House and Paul Atkins at the Securities and Exchange Commission (SEC). Bitcoin dropped by 6.3% this year, while the market cap of all coins fell by 8.2%.
Ethereum and most altcoins did much worse, with many of them being down by over 50% from their highest levels this year. The market cap of all coins dropped from over $4.2 trillion earlier this year to $2.9 trillion today.
In contrast, gold and silver prices more than doubled and jumped to their all-time highs. The stock market also jumped, with the S&P 500, Dow Jones, and the Nasdaq 100 indices reaching their all-time highs.
Crypto Market Crash Happened Despite Major Wins
The ongoing crypto market crash happened despite the industry having some major wins this year. The most important one was Donald Trump’s inauguration as the US president, a notable thing as he had pledged to be the most pro-crypto president.
Another victory was the approval of Paul Atkins as the SEC Chair. This was notable as he was a crypto lawyer who had always advocated for the industry. He replaced Gary Gensler, who was openly hostile to the industry.
There were other major victories, including the end of top lawsuits that the SEC had filed against some of the top companies. Some of the notable lawsuits that ended were against companies like Coinbase, Immutable, Ripple Labs, Uniswap, and, most recently, Aave.
Meanwhile, the House and the Senate voted for the GENIUS Act, which regulated the booming stablecoin industry. Most importantly, the SEC approved multiple altcoin ETFs like XRP, Solana, Hedera, and Litecoin. Some of these funds, like XRP and Solana, were received well by American investors.
The crypto crash happened even as the Federal Reserve delivered three rate cuts and restarted the quantitative easing (QE) strategy.
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Why the Crypto Crash Happened this Year
There are a few reasons why the crypto market crash happened despite having the biggest wins. First, the decline happened as American politicians failed to pass the CLARITY Act. While the House of Representatives passed the bill, divisions in the Senate have made this not possible. Passing the bill will be difficult since it needs 60 votes in an election year.
Second, the Senate and the House have not welcomed Donald Trump’s plan for a Strategic Bitcoin Reserve. This means that the American government will not go on a buying spree as some analysts were expecting.
Third, the crypto market crash happened as investors embraced other assets like gold and the Swiss franc as safe havens. Gold jumped to a record high, while the Swiss franc soared by 16% against the US dollar. There are signs that the market has not embraced the industry as a safe-haven yet.
Further, the decline happened as concerns about market manipulation jumped. These concerns escalated after Donald Trump and Melania launched their tokens earlier this year. These tokens have all plunged by over 90% from their all-time highs.
Fears of market manipulation escalated on October 10 when over 1.6 million traders were wiped out. Liquidations jumped to over $20 billion on that day, the highest figure on record. Since then, a sense of fear has remained in the market, with the Crypto Fear and Greed Index staying in the fear zone.
There are also signs that investors rotated to other booming sectors in the market, like stocks and precious metals. In particular, investors embraced AI stocks like Nvidia and Broadcom that offered better returns.
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