Cryptocurrency prices have declined sharply in recent weeks and are not expected to recover soon. Some of the major digital currencies have lost most of the gains they made after Donald Trump's election win generated excitement in the industry.
Analysts anticipate a subdued market until positive signals emerge, such as potential interest rate cuts by the U.S. Federal Reserve or a clear regulatory framework supporting cryptocurrencies from the Trump administration.
Bitcoin, the largest cryptocurrency, has dropped 21% from its peak on January 20, returning to levels seen immediately after Trump's election victory. Other cryptocurrencies like ether have experienced even steeper declines, with ether down more than 40% since December.
The market has shown disappointment regarding Trump's promises related to cryptocurrencies. Despite initial hopes for favorable crypto policies, Trump's actions have not significantly impacted cryptocurrency prices. The uncertainty caused by monetary policy and tariff threats from Trump have added pressure on cryptocurrency prices.
Market experts highlight the need for a clearer regulatory framework or a significant catalyst like additional ETF approvals to improve sentiment. While some analysts remain bullish, acknowledging the potential for new market entrants, others have had to adjust their expectations due to the delay in reports from Trump's crypto working group.
Analyst Geoff Kendrick from Standard Chartered maintains a bold target for Bitcoin to reach $500,000 before Trump's term ends, emphasizing the expected inflow of new investors. Reports suggest that banks and sovereign wealth funds are also becoming involved in the cryptocurrency market, alongside hedge funds.
Despite recent setbacks in the crypto market, some industry players remain optimistic about its long-term potential.