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When Donald Trump promised to turn the United States into the “crypto capital of
the world,” many investors believed that Bitcoin was entering a new golden age.
After his re-election in 2024, the cryptocurrency market exploded with optimism.
Regulations became more friendly, big companies entered the space, and millions
of new investors joined.
At first, everything seemed perfect. Bitcoin’s price nearly doubled and reached a
record high of around $126,000 in 2025. Many believed this was only the
beginning.
But in 2026, the story changed.
Bitcoin suddenly lost nearly half of its value. It dropped below $60,000, shocking
traders and raising serious questions. If the government now supports crypto, why
is Bitcoin crashing?
The answer is simple: politics alone cannot control a highly volatile market.
Bitcoin Has Always Been Volatile
Bitcoin has never been a stable asset. Since its creation, it has experienced many
big rises and painful crashes.
In the past, Bitcoin has fallen:
More than 80% in 2018
Nearly 70% in 2022
Almost 50% in 2026
Each time, many people said Bitcoin was “dead.” And each time, it later recovered.
Hedge fund expert Gary Bode says this kind of drop is normal. According to him,
strong price swings are part of Bitcoin’s design. Investors who understand this are
usually more patient.
Too Much Borrowing Led to Big Losses
One major reason for the crash was excessive borrowing.
During the bull market, many traders borrowed money to buy more Bitcoin. They
used margin trading and crypto loans to increase their profits.
When prices were rising, this strategy worked. But when Bitcoin started falling,
losses became huge.
Exchanges forced traders to sell their assets to cover debts. This created panic and
pushed prices even lower. One wave of selling caused another.
This cycle of borrowing and forced selling made the crash much worse.
Fear of Higher Interest Rates
Another important factor was the Federal Reserve.
When Kevin Warsh was nominated to lead the Fed, many investors believed interest
rates would rise. Higher rates usually hurt risky assets like Bitcoin.
If banks and bonds offer better returns, people prefer safer investments. As a result,
many investors sold their crypto.
Gary Bode argues that the market misunderstood this situation. He believes the
Fed will not raise rates too much because of government debt. Still, fear spread
quickly, and fear is powerful in financial markets.
Trump’s Trade Policies Shook Confidence
In October 2025, President Trump announced possible new tariffs on Chinese
imports. This news worried global investors.
Markets around the world reacted badly. Stocks, currencies, and cryptocurrencies
all dropped.
While traditional stocks recovered later, crypto did not. Because of high leverage
and speculation, Bitcoin suffered more than other assets.
This shows that even decentralized currencies are affected by political events.
Big Investors Took Profits
Large Bitcoin holders, known as “whales,” also played a role.
Some early investors who bought Bitcoin at very low prices decided to sell part of
their holdings. After years of gains, they wanted to secure profits.
This selling increased supply in the market and pushed prices down.
However, experts say this is normal behavior. It does not mean whales have lost
faith in Bitcoin. It simply means they are managing their wealth.
Corporate Bitcoin Risks
Some big companies hold large amounts of Bitcoin. One of them is Strategy
(formerly MicroStrategy).
When Bitcoin prices fell, investors worried that the company might be forced to sell
its coins to pay debts. These fears created more pressure on the market.
Even though no major sell-off happened, uncertainty alone was enough to scare
many traders.
The Growth of “Paper Bitcoin”
Today, many people invest in Bitcoin through ETFs and derivatives. They do not
own real coins. They only own financial products that follow Bitcoin’s price.
This is called “paper Bitcoin.”
These products make trading easier, but they also increase short-term volatility.
More people can buy and sell quickly, which makes prices move faster.
Still, the real supply of Bitcoin remains limited to 21 million coins. This scarcity
continues to support long-term value.
Energy and Mining Are Not the Main Problem
Some analysts blame rising electricity prices for Bitcoin’s decline. Mining requires a
lot of energy, and higher costs reduce profits.
But history shows that mining adapts. When prices fall, inefficient miners leave, and
stronger ones remain.
New technologies like renewable energy and advanced data centers may also
reduce future costs.
Energy problems are unlikely to destroy Bitcoin.
Is Bitcoin Really a Store of Value?
Many critics say Bitcoin is too risky to be a store of value.
They compare it to gold, which is more stable.
Supporters answer that every asset has risks. Currencies lose value because of
inflation. Banks can fail. Governments borrow too much.
Bitcoin offers something different: independence from central authorities and fixed
supply.
Its volatility is high, but so is its potential.
Lessons from the Past
Bitcoin’s history teaches one clear lesson: crashes are part of the journey.
Every major bull market has been followed by a deep correction. Every major
correction has been followed by recovery.
Investors who panic usually lose. Those who stay patient often benefit.
This does not mean profits are guaranteed. It means long-term thinking matters.
Regulation Still Supports Crypto Growth
Even after the crash, the regulatory environment remains positive.
The U.S. government has:
Approved crypto-friendly leaders
Passed stablecoin laws
Improved legal clarity
Encouraged innovation
Big banks and financial institutions continue to build crypto services.
These developments show that crypto is becoming part of the global financial
system.
What Can Investors Expect Now?
Nobody knows exactly what will happen next.
Some experts believe Bitcoin will rise again if interest rates fall and new money
enters the market.
Others think prices may stay low for months.
Most likely, Bitcoin will remain volatile and move sideways before choosing a new
direction.
Investors should prepare for ups and downs.
Volatility Is Part of Bitcoin’s Nature
Trump promised a crypto revolution, and in many ways, he delivered better
conditions for the industry. But no government can remove risk from a speculative
asset.
Bitcoin crashed because of:
Too much borrowing
Market fear
Political uncertainty
Profit-taking
Natural volatility
Gary Bode believes this is not a crisis. It is a normal phase.
For long-term believers, this period is a test of patience.
For short-term traders, it is a warning.
Bitcoin remains risky, unpredictable, and controversial. But it also remains one of
the most important financial innovations of the modern era.
The crypto revolution is not over. It is simply moving through another storm.
