Bitcoin dropped by over 6.5% to record less than $98,000 this morning in Europe, just days after US President Trump issued an executive order recognizing digital assets as one of the main drivers of innovation in the United States. It has since recovered and reduced its losses to just 5%, currently trading near $99,221.
This decline coincided with a severe drop in prices of many smaller cryptocurrencies, with Solana and Ripple seeing declines of 11% and 14% respectively, after experiencing notable increases following Trump's election victory. The Ether currency (which is the second-largest digital currency by market capitalization) also fell by more than 8% during trading.
Trump's announcement of the new policy attracts market interest This drop in prices came after Trump announced on Friday the establishment of a working group aimed at advising the White House on cryptocurrency policy, as part of executing his executive order concerning digital assets. The group has been tasked with developing a regulatory framework for digital assets in the US within six months, alongside exploring the possibility of creating a stockpile of digital currencies, which did not include a direct confirmation to establish a Bitcoin reserve, as Trump had promised during his election campaign.
Market reactions and analysis of future expectations Analyses indicate that the markets had priced in 90% of what was expected from Trump’s executive orders, and therefore, any development short of establishing a Bitcoin reserve (which would have started buying Bitcoin immediately) is considered disappointing for cryptocurrency markets.
Additionally, Justin Danithan, head of sales at Liquifi (a consulting company specializing in token launches), stated that the market has shown some calm after a series of positive news in recent times, such as regulatory appointments supportive of cryptocurrencies, the filing of new exchange-traded funds, and executive orders related to digital assets.
Analysis of the cryptocurrency market The drop in Bitcoin and digital asset prices follows a series of economic and political events that contribute to determining market direction. Cryptocurrencies have seen notable declines due to profit-taking after recent increases, at a time when concerns are growing about the impact of fluctuations in global economic policies.
