Why Crypto is Crashing: Bitcoin Erases Trump Gains
In the volatile world of cryptocurrencies, what goes up must come down—and Bitcoin's latest tumble is a stark reminder. As of February 5, 2026, the flagship digital asset has dipped below $71,000, marking a nearly 20% decline since the start of the year. This plunge has erased all gains accumulated since President Donald Trump's re-election in 2024, leaving investors reeling and questioning the future of the sector. Once riding high on pro-crypto promises from the White House, the market now faces a perfect storm of regulatory delays, political scandals, and global economic jitters.
The Rise and Fall: A Timeline of Bitcoin's Rollercoaster
Bitcoin's journey since Trump's 2024 victory has been nothing short of spectacular—until now. Following his re-election, the cryptocurrency surged, hitting $100,000 for the first time in December 2024. It breached that milestone again in February and May 2025, fueled by optimism over lighter regulations. By October 2025, Bitcoin reached an all-time high of over $127,000, as traders bet on the U.S. becoming the 'world's cryptocurrency capital,' a pledge Trump made during his campaign.
Trump didn't just talk the talk. Shortly after inauguration, he launched World Liberty Financial, a crypto firm backed by his family, and announced a strategic crypto reserve including Bitcoin and four other digital currencies. These moves ignited explosive gains across the crypto space, with altcoins like Ethereum and Solana following suit. But the party ended in mid-January 2026, when Bitcoin began a steep slide. On Thursday alone, it fell more than 7%, trading at around $70,900 by early GMT hours.
Key Milestones in the Crypto Boom-Bust Cycle
- Nov 2024: Trump's win sparks initial rally.
- Dec 2024: Bitcoin hits $100K amid policy hype.
- Oct 2025: All-time high of $127K on reserve announcement.
- Jan 2026: Downward trend begins with regulatory snags.
- Feb 2026: 20% YTD loss, below $71K.
Regulatory Roadblocks: Why the Trump Crypto Dream is Stalling
At the heart of the crash lies disappointment over unfulfilled promises. Trump's administration pushed for a bill to regulate crypto trading, aiming to ease burdens after years of crackdowns under previous regimes. However, the legislation has stalled in the U.S. Senate, bogged down by fierce disagreements between traditional banks and crypto firms. Banks fear losing market share to decentralized finance (DeFi), while crypto advocates decry any oversight as a threat to innovation.
This impasse has eroded investor confidence. 'The lack of clarity is killing momentum,' says crypto analyst Maria Gonzalez of Blockchain Insights. 'Traders were banking on swift deregulation, but Senate gridlock signals more uncertainty ahead.' Without a clear framework, institutional investors—who poured billions into Bitcoin post-election—are pulling back, exacerbating the sell-off.
Political Scandals Add Fuel to the Fire
Compounding the regulatory woes is scrutiny over Trump's personal ties to crypto. On Wednesday, Democratic lawmaker Ro Khanna announced an investigation into World Liberty Financial following a Wall Street Journal report. The exposé revealed that representatives of an Abu Dhabi official signed a $500 million deal for a 49% stake in the venture. Critics argue this raises conflict-of-interest concerns, especially as Trump positions the U.S. as a crypto hub.
'This isn't just business; it's optics,' notes financial expert Dr. Liam Harper. 'Foreign investment in a presidential family's firm could undermine the strategic reserve's credibility.' The probe has triggered a wave of negative sentiment, with social media buzzing about 'crypto corruption' and prompting retail investors to dump holdings.
Broader Market Forces: Not Just a Crypto Problem
The crypto crash isn't happening in isolation. Equities and commodities markets also posted losses on Thursday, with silver plummeting up to 16% and benchmark indexes in Hong Kong and Japan down 1.3% and 0.7%, respectively. Analysts point to global economic headwinds, including persistent inflation fears and geopolitical tensions, as key drivers.
In the U.S., the Federal Reserve's recent signals of slower interest rate cuts have spooked risk assets like cryptocurrencies, which thrive in low-rate environments. 'Crypto is highly correlated with tech stocks and growth assets,' explains economist Sarah Kline. 'As broader markets wobble, Bitcoin bears the brunt due to its volatility.'
Additionally, environmental concerns linger. Bitcoin mining's energy demands have drawn renewed criticism, with calls for greener regulations potentially hiking operational costs and deterring miners.
Investor Sentiment and the Fear Index
The Crypto Fear & Greed Index, a popular sentiment gauge, has swung from 'extreme greed' in late 2025 to 'fear' territory this week. Whale movements—large holders transferring coins to exchanges—signal potential further dumps. Retail participation, once booming via apps like Coinbase, has cooled as losses mount.
What’s Next for Crypto? Recovery or Deeper Crash?
While the immediate outlook is grim, history shows crypto's resilience. Past crashes, like the 2022 'crypto winter,' led to rebounds as innovations emerged. If the Senate passes the stalled bill, it could restore faith. Trump's team has vowed to push forward, but the Abu Dhabi deal probe may delay progress.
For investors, diversification is key. Experts recommend monitoring Fed policies and election-year politics, as midterms in 2026 could shift the regulatory landscape. 'This dip might be a buying opportunity for long-term holders,' Gonzalez advises, 'but short-term traders should brace for more pain.'
In summary, the crypto crash stems from a mix of dashed regulatory hopes, scandalous headlines, and macroeconomic pressures. As Bitcoin licks its wounds below $71,000, the industry must navigate these turbulent waters to reclaim its post-Trump glory. Stay tuned to Everythiiing.com for updates on this unfolding story.
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