Crypto winter fears return as Trump-fueled rally unravels

Retail crypto traders were back on uneasy ground last week after a sharp sell-off briefly dragged BTC below its post-election levels, reigniting fears of a fresh “crypto winter,” Bloomberg reports. BTC sank 13% in a single session last Thursday to around USD 60k — its steepest daily drop since the 2022 FTX collapse — before clawing back above USD 70k a day later. Even with the rebound, the cryptocurrency still ended the week down roughly 30%, unsettling investors who had assumed political backing and Wall Street adoption had made the market more resilient.

The immediate trigger was US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, a move that cooled demand for risk-sensitive assets, including BTC and precious metals, Reuters argued. But analysts say the downturn was already in motion. “This contraction has been underway for several months and remains ongoing,” Kaiko research analyst Thomas Probst said, warning that thinning liquidity is making price swings sharper and more erratic.

The reversal marks a clear break from the Trump-fueled optimism that once pushed BTC past USD 125k, driven by expectations of a more crypto-friendly US administration, strong ETF inflows, and progress on industry-backed legislation. Those hopes have faded. Money has flowed out of crypto funds in recent months, the Trump-linked World Liberty Financial coin has lost much of its value, and key bills remain stalled in the US Senate — despite earlier bank forecasts calling for BTC to hit USD 300k by year-end.

For retail investors, the sell-off has cracked the idea that crypto now has a reliable price floor. With US policymakers ruling out direct intervention and Treasury officials dismissing calls to backstop BTC with public funds, traders are once again exposed to the asset class’s defining risk: volatility driven as much by narrative as fundamentals.

History suggests the pain can spill into the real economy. Prolonged downturns have often triggered layoffs, stalled innovation, and weaker confidence across the sector.

However, veterans argue the pattern is familiar. Every previous crypto winter has eventually given way to a new peak, albeit after long periods of losses and consolidation. “There are several things signifying that we are very close to a bottom, if not having achieved it,” said James Butterfill of CoinShares, signalling that the worst of this slump is over — even as investors brace for a longer chill.

MARKETS THIS MORNING-

Asia-Pacific markets are a sea of green in early trading this morning as investors react to Japanese Prime Minister Sanae Takaichi’s victory, which also sent gold soaring after ending last week in the red. Japan’s Nikkei and South Korea’s Kospi are leading gains.

THE CLOSING BELL-

The EGX30 rose 0.6% at yesterday’s close on turnover of EGP 7.7 bn (31.7% above the 90-day average). Local investors were the sole net buyers. The index is up 19.6% YTD.

In the green: Heliopolis Housing (+8.4%), Valmore Holding- EGP (+8.1%), and Edita (+7.3%).

In the red: GB Corp (-3.5%), Eastern Company (-3.1%), and Qalaa Holdings (-1.7%).