Crypto Market Experiences Significant Losses Amid Tariff Shocks and Regulatory Changes in 2025
The cryptocurrency market faced a turbulent year in 2025, erasing about $1 trillion in value by the end of the year despite Bitcoin reaching an all-time high of $126,000 on October 6. Earlier in the year, a strategic cryptocurrency reserve announced in March fueled a 62% rally in prices of several coins, with Bitcoin rising to $94,164 after the announcement.
However, the market was severely impacted following US political and economic moves. On October 12, President Donald Trump announced 100% tariffs on China, triggering a market shock that liquidated $19 billion within 24 hours—the largest liquidation on record. Ethereum's price fell approximately 40% over the following month. Analysts attribute the downturn to three main macro factors: the October leverage washout, ongoing US-China tariff tensions, and potential unraveling of corporate treasury trades.
Early in 2025, Trump issued an executive order repealing prior cryptocurrency restrictions and implemented favorable regulations, including the creation of a presidential working group on digital assets. Despite these measures and early optimism, Bitcoin dropped below $81,000 in November, hovered near $90,000 in December, and Eric Trump’s American Bitcoin Corp lost about 40% of its value, roughly $1 billion, in early December.
Market sentiment was also influenced by a shift among miners towards AI datacenters, contributing to weakness in AI stocks and Nvidia shares, which in turn negatively affected crypto sentiment.
Despite the volatile market conditions, notable figures expressed sustained long-term confidence in cryptocurrency. BlackRock's Larry Fink and Coinbase’s Brian Armstrong voiced optimism, with Armstrong stating that Bitcoin would not go to zero, and Fink recognizing the presence of legitimate long-term holders, including sovereign wealth funds.
