5 min readBitcoin is falling after failing to maintain a short-lived rally on the hype of President Trump’s return to the White House and the prospect of more crypto-friendly policies.
Bitcoin has fallen below support at around the 105K level, moving further from the 109K record high.
Altcoins have also turned red, with Ethereum dropping to $3200, DOGE falling to $0.35, and ADA dropping to the $1 level.
While cryptocurrency markets found some support from news that the Securities and Exchange Commission is setting up a task force to help advise on crypto regulation, the support proved to be short-lived. This announcement definitely points to progress towards friendlier regulation. However, few details have been provided on what policies will be covered and on the timeline.
Delay over crypto-related executive orders
Despite Trump’s pro-crypto stance throughout the election campaign, Trump has not signed any executive orders related to crypto in his first few days of office, leading to disappointment. Bitcoin is falling further from the 109K record high that it reached briefly before Trump’s inauguration this week.
Trump’s meme coin, $TRUMP, fell 13% to $37.41 on Thursday, well down from the $80.00 high it reached just after its launch at the weekend.
AI coins fall despite Trump’s AI investment plans
While Trump’s pro-crypto stance has not lived up to expectations yet, his $500 billion AI investment plan was impressive but failed to buoy AI crypto coins.
AI coins can react to AI news and development. For example, in the past, these coins surged after Nvidia’s quarterly earnings. However, news that Trump was creating Stargate, which intends to invest $500 billion over four fours on new AI infrastructure, has failed to lift crypto coins such as Near protocol (NEAR) or Virtual protocol (VIRTUAL), to name another. These coins are falling today but may catch the eye of individual and institutional investors as AI developments accelerate.
NEAR Chart
However, it’s worth noting that the AI crypto market is also vulnerable to volatility. It has dropped 31% in just two months.
Caution surrounding Trump’s trade policies
Beyond crypto policies, today’s broader crypt market drop is also a reaction to caution surrounding Trump’s potential trade tariffs. Trump will speak later today at the World Economic Forum in Davos, where he could provide more clues about his policy plans.
The US dollar is rising for a third straight day, and this could be attributed to the tariffs that Trump is considering introducing on China, Mexico, Canada, and Europe. Trade tariffs are considered to be inflationary and could prevent the Federal Reserve from cutting interest rates this year.
The Federal Reserve meets next week, and the market is pricing in a 99% chance that the Fed will leave interest rates on hold.
A lower interest rate environment is more beneficial to riskier assets such as crypto.
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