Bitcoin’s spectacular rise and fall around Donald Trump’s inauguration has captured the attention of investors and market watchers alike, as the cryptocurrency spirals between historic highs and alarming declines.
On January 20, 2025, Bitcoin saw its price vault to 109,000 USD, exceeding its previous record of 108,000 USD just established about a month prior. This surge came seemingly out of nowhere, with the price fluctuated nearly 10k USD within just 24 hours. According to data from CoinMarketCap, Bitcoin traded at 103,089 USD at 7:00 AM on January 21, maintaining its momentum for most of the day. The market had been abuzz as many investors anticipated Trump's presidency would fundamentally reshape the cryptocurrency market.
Significant liquidity appeared to vanish as the launch of TRUMP and MELANIA memecoins, both associated with the former president, drew immense attention and investment. The TRUMP token recorded dizzying trading volumes of up to 44 billion USD within the first 24 hours of its launch on January 17, 2025. Trump’s involvement, as many speculated, could bring forth regulatory changes favorable to digital assets. Ben El-Baz, CEO of HashKey Global, stated the introduction of these tokens had invigorated Bitcoin as retail investors 'hoped he would prioritize and reaffirm his commitment to cryptocurrency.'
But shortly after the inauguration festivities, the climate turned. Trump thanked his supporters and reiterated his plans for the U.S. economy, including vague references to cryptocurrency, leading many traders to express concerns. Bitcoin’s value slid back to around 102,422 USD almost immediately following Trump’s speech, reversing its gains and indicating investor discontent.
Even Ethereum, which had shown signs of life, managing meager fluctuations between 3,200 to 3,400 USD, seemed affected by the commotion surrounding the memecoins. Post-inauguration, Ethereum’s performance spectated weakly, with critics calling for notable changes within the Ethereum Foundation.
The volatility wasn't limited to Bitcoin and Ethereum. Solana, having gained traction due to the hype around TRUMP and MELANIA tokens, witnessed its price skyrocket to new heights before also experiencing sharp sell-offs. Observers noted the trading volume on decentralized exchanges (DEX) surged dramatically to 23.7 billion USD—a historic high, primarily attributed to the TRUMP-themed tokens.
Speculation was rampant about if and how Trump would approach cryptocurrency regulations, with some experts betting on the establishment of a 'strategic Bitcoin reserve' within his first 100 days of taking office. This was supported by considerable bets tracked on the Polymarket platform, which indicated support for the reserve peaked at nearly 70% before phrasing out following the inauguration day.
Critics of the memecoins expressed unease about the motives behind their launch, arguing it blurred the lines between political branding and investment. Analysts argued such launches could lead to unnecessary hype and speculatory traps. Richard Galvin of DACM expressed concern over the overwhelming capital flowing to Trump-branded coins, potentially draining liquidity from more established cryptocurrencies.
Despite the tremendous peaks within the market, the aftermath of Trump's inauguration painted a different picture. Values across many altcoins dwindled, signaling broader market liquidation. Within 24 hours following Trump’s speech, over 700 million USD worth of positions were liquidated on various exchanges, highlighting the frantic and unstable nature of the crypto markets.
Going forward, investors and analysts are bracing for any potential policy changes from the Trump administration with regards to cryptocurrencies. Many foresee opportunities lying therein, though the unpredictability of Bitcoin and other cryptocurrencies remains evident. The sentiment is one of cautious optimism, stirring debates over Trump’s long-term impact on the cryptocurrency industry.
Even with all the challenges, one thing is clear: the market's reaction to political events—such as Trump’s inauguration—illustrates the volatile nature of crypto trading, where investor sentiment can shift dramatically with the faintest announcement. The attention now turns to Trump's potential movements on blockchain and cryptocurrencies; the coming weeks may reveal whether his administration will follow through on promises made during the campaign.