Bitcoin declines below $80,000 as Trump-fuelled crypto euphoria fades

Cryptocurrency prices sharply declined on February 28, as the rally fueled by Donald Trump's victory in the US elections continued to lose momentum.

Cryptocurrency prices sharply declined on February 28, as the rally fueled by Donald Trump's victory in the US elections continued to lose momentum. The major cryptocurrencies have now erased most of the gains which were made during the post-election surge.

Analysts suggest that the crypto market is likely to remain subdued as it awaits a bullish signal like US Federal Reserve's rate cut or a clear pro-crypto regulatory framework from the Trump administration.

Bitcoin, the biggest cryptocurrency, dropped over 9 percent to hover near 78,800. The cryptocurrency has so far fallen nearly 28 percent from its all-time high of $109,241 which it had hit on January 20 this year. It currently has a market cap of $1.56 trillion, as per data on CoinMarketcap.

Other cryptocurrencies also recorded strong losses. Ethereum dropped over 10 percent to trade at $2,109 apiece. The crypto saw a sharper fall than Bitcoin, tumbling over 33 percent in just one month.

Solana saw even more significant fall, dropping nearly 45 percent in one month. The cryptocurrency crashed over 7 percent to trade at $129.93 apiece on February 28.

The Trump meme coin too has seen a sharp fall. The digital token had witnessed an extraordinary surge of 600 percent in value within 36 hours of its launch, turning a Rs 10,000 investment into nearly Rs 70,000 at its peak. It hit an all-time high of $73 in January. However, it has now tumbled 85 percent since then to trade at $11.23.

Since the early days of his presidential campaign, Donald Trump promised to introduce a wave of pro-crypto regulations, vowing to be a "crypto president". The Republican Party leader had pledged to create a national bitcoin stockpile and named crypto proponents Howard Lutnick and David Sacks to prominent posts within his administration.

On the very first week in office, Trump issued an executive order for the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and looking into creating a national crypto stockpile. This however disappointed the market, analysts said. The uncertainties over hawkish monetary policy and Trump's threat of tariffs further impacted the crypto market, said James Butterfill, head of research at asset manager CoinShares.

"That's increasing all this market uncertainty, which is absolutely not helping bitcoin at all. Until we get (clarity on a bitcoin reserve), I can't see prices recovering significantly," he said.

"The initial excitement surrounding the Trump administration’s perceived pro-crypto stance appears to be in a phase of recalibration," said CF Benchmarks Head of Research Gabe Selby, who further added, "For sentiment to shift more decisively, a clearer regulatory framework or a major catalyst - such as additional ETF (exchange traded fund) approvals or policy shifts - seems to be necessary."

Standard Chartered analyst Geoff Kendrick predicted a significant rise for Bitcoin. He said the crypto will hit $500,000 before the end of Trump’s tenure as new buyers enter the market.

(With inputs from Reuters)