President Donald Trump’s 2024 re-election and pledge to make the United States “the crypto capital of the world” helped push bitcoin from roughly the level it traded at in November 2024 to a peak near $126,000 in October 2025; by early February 2026 the price had tumbled to about $60,000. The rapid rise was amplified by heavy borrowing and speculative positioning; the unwind that followed was triggered by sudden market-wide risk aversion after Trump’s Oct. 10 tariff threat. Stocks later recovered and hit fresh highs, but crypto’s steep losses persisted, exposing the sector’s volatility and sparking fresh debate about regulation and investor protections. This article unpacks what happened, why it matters, and what to watch next.
Key takeaways
- Bitcoin nearly doubled from around $63,000 in November 2024 to about $126,000 in October 2025, then slid to roughly $60,000 by early February 2026.
- Leverage and margin borrowing magnified gains on the way up and losses on the way down, creating a contagion of forced selling.
- Markets shifted sharply after Oct. 10, 2025, when President Trump threatened an extra 100% tariff on Chinese imports on top of an existing 30% tariff, prompting widespread liquidations.
- Traditional equity markets recovered and the Dow hit a record high after the shock, highlighting a divergence between stocks and crypto.
- The Trump administration has installed crypto-friendly figures, including Paul Atkins as SEC chair in 2025, and Congress passed a major stablecoin law in 2025 that industry advocates called a milestone.
- Past crises — from ICO mania in 2018 to the FTX collapse and the 2022 crypto winter — show the sector’s recurring boom-and-bust pattern.
- Industry spending in 2024 helped elect crypto-friendly legislators, contributing to favorable legislation but leaving oversight questions unresolved.
Background
Cryptocurrencies have existed in a high-volatility cycle since their mainstream emergence: exuberant runs are frequently followed by abrupt reversals. In early 2022, bitcoin fell from about $50,000 to under $20,000 amid interest-rate increases and the collapse of major players such as FTX. That winter left many retail and institutional participants wary, but the political shift after November 2024 reopened hopes that Washington would make regulatory space for crypto to grow.
President Trump campaigned on an explicit pro-crypto platform and declared a national ambition to be the world’s leading crypto hub; the statement helped reset investor expectations. The administration’s 2025 appointment of Paul Atkins as Securities and Exchange Commission chair and Congress’s passage of stablecoin legislation the same year were viewed by supporters as a structural win that could anchor a new, more permissive regulatory regime. At the same time, critics warned that easier rules could expose consumers to risk and that rapid capital flows into crypto would revive speculative excess.
Main event
The immediate market reversal accelerated after Oct. 10, 2025, when President Trump threatened to add a 100% tariff on Chinese imports on top of a 30% levy already in place. The announcement sparked broad risk-off trading: equities, currencies and commodity-linked assets sold off as investors sought cash and safety. For highly leveraged crypto positions, the move triggered margin calls and forced liquidations that fed back into price declines.
Crypto’s tumble was sharper than many expected because a large share of recent buying had been financed through borrowing. When prices fell, lenders and exchanges liquidated collateral, pushing prices down further in a classic deleveraging spiral. That contagion effect differed from the post-shock path for equities, where markets recovered and the Dow Jones Industrial Average subsequently reached a new record high.
The selloff rekindled memories of earlier crashes, persuading some retail investors to exit and reducing the pool of willing buyers. Exchanges and market participants reported higher volatility and lower trading depth, making rebounds more difficult. Industry groups emphasized the long-term potential of blockchain technology, while consumer advocates and some regulators reiterated the need for investor protections and clearer oversight.
Analysis & implications
First, the episode highlights how political shocks can cascade through speculative markets. The tariff threat was a policy surprise that changed global growth and risk-price expectations; in a market where many positions were levered, the mechanical effects of margining dominated. That means future policy surprises — trade, sanctions, or abrupt regulatory guidance — could produce outsized moves in crypto compared with more liquid, regulated markets.
Second, regulatory signals matter but do not inoculate assets against volatility. The appointment of a crypto-friendly SEC chair and passage of stablecoin rules provided structural support and encouraged fresh capital inflows, yet they did not address the short-term balance-sheet risks arising from leverage. Investors and policymakers face a trade-off: lighter-touch rules may foster innovation but also leave systemic fragilities unaddressed.
Third, the divergence between equities and crypto after the shock underlines differing investor bases and market microstructure. Equities benefit from deep institutional capital, market-making capacity and well-established safety nets; crypto markets remain more retail-heavy, fragmented, and prone to liquidity gaps. That structural difference suggests crypto could remain more sensitive to sudden withdrawals and sentiment shifts, even in a friendlier regulatory climate.
Finally, the episode could accelerate two opposing trends: renewed calls for tighter oversight around margining, custody and leverage, and stronger lobbying by industry players to codify permissive frameworks. Which force prevails will shape whether crypto becomes more stable over time or continues to oscillate between booms and busts.
Comparison & data
| Date | Approx. Bitcoin price (USD) |
|---|---|
| Nov 2024 (post-election) | $~63,000 |
| Oct 2025 (peak) | $~126,000 |
| Early Feb 2026 (after slump) | $~60,000 |
| Jan 2022 (pre-winter) | $~50,000 |
| Late 2022 (crypto winter) | <$20,000 |
The table summarizes headline price milestones referenced in reporting: bitcoin roughly doubled from late 2024 to its October 2025 peak, then fell by more than half into early February 2026. Those headline moves mask intraday swings and regional price dispersion, but the broad arc — surge, leverage-fueled extension, and steep unwind — fits historical boom-bust episodes in crypto.
Reactions & quotes
Industry supporters highlighted regulatory gains while warning that short-term volatility is not the same as failed technology; critics said the losses expose ongoing consumer risk. Below are representative statements reported contemporaneously.
“The U.S. should be the crypto capital of the world,” said President Donald Trump while campaigning, a pledge that helped spur investor optimism after his 2024 victory.
President Donald Trump (campaign remarks)
Advocates pointed to legislative wins and regulatory appointments as durable improvements. However, consumer-protection organizations cautioned that speculative structures remained fragile and that favorable policy alone would not remove market risk.
“Bitcoin is anything but safe. It’s the most speculative asset, and I think people are realizing that that’s the case,”
Ben Schiffrin, Better Markets (consumer finance advocacy)
Unconfirmed
- Whether the Oct. 10 tariff threat was the sole or primary cause of the bitcoin decline; multiple interacting factors (leverage, sentiment, liquidity) likely contributed.
- The degree to which newly passed stablecoin legislation will attract sustained institutional custody and balance-sheet support remains uncertain pending market adoption.
- Claims that regulatory appointments will automatically convert into long-term permissive oversight are contingent on future agency actions and potential congressional changes.
Bottom line
The bitcoin selloff around early February 2026 underlines that political optimism and regulatory wins can prompt large inflows — but they do not erase structural market risks like leverage, weak liquidity and retail concentration. A policy surprise on Oct. 10, 2025 amplified those vulnerabilities into a sharp unwind, even as broader equity markets later recovered.
Going forward, the critical questions are whether lawmakers and regulators will tighten market safeguards around margining and custody, and whether institutional liquidity will deepen to reduce future flash declines. For investors, the episode is a reminder that structural reforms and political endorsements can coexist with persistent, often extreme, price volatility.