What’s wrong with cryptocurrencies? Bitcoin has fallen 25% since October to less than $100,000, underperforming gold and stocks, while crypto stocks Circle Internet Group and Blish have also fallen from their highs. Risk appetite has declined, long-term investors have been outflowing their funds, and inflows into exchange-traded funds (ETFs) have slowed. The hype surrounding Bitcoin’s corporate buyers has faded, and some are starting to sell.
Perhaps one of the answers lies in American politics. The election of President Donald Trump last year was a game-changer, driving Bitcoin above $100,000 for the first time on a wave of high expectations and massive donations, on a promise to make America the “crypto-asset of the world” by rolling back regulations and bringing digital assets into state institutions. It may be no coincidence that political and market bubbles are bursting at the same time in the wake of MAGA’s electoral setbacks, with Zoran Mamdani’s success in New York slamming the city’s wealthy elites as they seek to become crypto hubs.
