$800 Billion Loss Rocks Crypto World as Trump-Driven Excitement Wanes

Global cryptocurrency markets have lost more than $800 billion in recent weeks.

As the Financial Times (FT) reported Wednesday (Feb. 26), this rout comes as the enthusiasm within the crypto sector that came with Donald Trump’s election victory begins to fade.

Bitcoin, the world’s most popular crypto, has lost more than 15% this month, with its pricing falling to $86,500 Wednesday. Other tokens have seen even larger losses, thanks in part to shaken confidence following a record hack of the Bybit exchange.

But as the FT notes, traders are also frustrated with Trump’s speed at following through on some of the promises he made to the cryptocurrency sector during the campaign.

“The slower than anticipated rollout of any major pro-crypto policies has led to disappointment,” said Gadi Chait, investment manager at Xapo Bank.

The report, citing CoinMarketCap data, says the nominal value of the crypto industry has dropped by $810 billion from its high in January. Investors also withdrew close to $1 billion from bitcoin exchange traded funds (ETFs) on Tuesday (Feb. 25). And investors are also concerned about Trump’s tariffs, leading them to seek less risky assets.

“There has been a recalibration of expectations regarding the Trump administration’s crypto stance,” Chait added.

Some traders had hoped the U.S. under Trump would start buying bitcoin or pass new regulations that paved the way for big banks to purchase crypto.

However, the new president’s most high-profile crypto-related move so far has been launching a so-called memecoin just before taking office. That coin’s price has plummeted, while many figures in the crypto world criticized Trump for not taking the assets seriously enough.

In other crypto news, PYMNTS discussed the topic of digital asset regulation earlier this week with Amias Gerety, a former assistant treasury secretary and partner at QED Investors.

While bipartisan stablecoin legislation is gaining momentum, he warned PYMNTS CEO Karen Webster that the real fight centers around “narrow banking” — where financial institutions hold deposits without lending.

“The Fed is nervous this could starve the economy of credit,” he said.

While supporting private blockchain innovations like tokenized mortgages (“an awesome use case”), he warned that dollar-pegged stablecoins effectively create “a 24/7 global payment rail” outside the world of traditional banking, posing geopolitical dilemmas.

“Do we want Nigerian businesses dollarizing via USDC?” Gerety asked, pointing out that such access could bolster the dollar but destabilize foreign economies. The legislation’s success depends on reconciling banks’ risk appetite with the borderless nature of crypto.

“Stablecoins succeed where KYC is minimal,” he said, arguing that regulated players could still avoid emerging markets.