Trump's second term is off to a bad start

The contrast between the first 50 days of Trump's first and second terms is impossible to ignore. Eight years ago, the market was brimming with optimism as investors bet on tax cuts, deregulation, and a booming economy.  At first, similar hopes buoyed the S&P 500 and Nasdaq.      

But optimism quickly faded, replaced by uncertainty about the impact of trade alerts and fears about the economy's outlook. Against this backdrop, Monday was the worst start for U.S. stocks under a new presidency since 2009, when Obama took office amid a financial meltdown.

The crypto market didn’t escape the turmoil either. On Monday, the total market capitalization of altcoins (Total2) dropped below $1 trillion for the first time since November 2024. Bitcoin prices slipped under the $80,000 mark, while ETHUSD crashed below $2,000 — a level it hadn’t seen since November 2023.    

And what about Trump’s strategic crypto reserve, which was supposed to boost the market? A total letdown. Instead of new investments or major Bitcoin purchases, the reserve will only hold confiscated crypto from criminal and civil cases — no fresh capital, no real support — just another empty promise.      

The crypto summit on March 7 didn’t do much to lift investor sentiment either — it was just the same old talk with no fresh ideas or concrete commitments. The market can't grow forever on promises alone, so it's not surprising that the cryptocurrency market fell after such a long-awaited event.    

So, where does this leave crypto?    

The fundamental factors that could have supported digital assets appear to have largely run out of steam. At this point, Bitcoin and other cryptocurrencies will likely move in sync with the stock market. If the latter falls, cryptocurrencies will likely do the same, but with greater volatility, given their risky nature. 

What might cause the next wave of market volatility? 

One possible trigger for risk appetite this week could be disappointing inflation data. If the CPI and PPI data suggest that prices are rising more than expected, it could reduce the chances of the Federal Reserve's interest rate cuts that many investors expect, putting further pressure on markets.

In short, the first “crypto-president” has not provided the boost many hoped for. Even in the case of the “strategic crypto-reserve,” instead of driving growth, it has only disappointed investors. If the economy does not improve, market sentiment could deteriorate further, dragging down the crypto market.