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Bitcoin has nearly erased gains since Trump election

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Lack of U.S. bitcoin reserve, pace of change disappoints

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Nearly $1 trillion wiped off crypto markets since December

By Tommy Reggiori Wilkes and Hannah Lang

LONDON/NEW YORK, Feb 28 (Reuters) - Cryptocurrency

prices are down sharply in recent weeks and not expected to

rebound soon, with some of the biggest digital currencies

erasing nearly all of the gains they made after Donald Trump's

election win triggered a wave of excitement across the industry.

Some analysts said the market is likely to remain subdued

while waiting for a bullish signal, such as indications that the

U.S. Federal Reserve plans to cut interest rates or a clear

pro-crypto regulatory framework from the Trump administration.

Bitcoin, the biggest cryptocurrency, has fallen 21%

from a January 20 peak and is back to levels seen shortly after

Trump's U.S. presidential election victory in November, as hopes

for a strategic bitcoin reserve fade and tariff threats weigh on

demand for speculative assets.

Other cryptocurrencies have fallen faster, with ether

down more than 40% since December.

Trump's own so-called meme coin, which he launched days

before his inauguration in a move that sparked

conflict-of-interest concerns, is down 80% from a January peak,

according to CoinMarketCap data.

The U.S. president promised a wave of pro-crypto moves

during his campaign, vowing to be a "crypto president." He

pledged to set up a national bitcoin stockpile while overhauling

crypto regulations, and named crypto proponents Howard Lutnick

and David Sacks to prominent posts within his administration.

Under Trump, the Securities and Exchange Commission has

withdrawn investigations into several crypto companies and

dropped a lawsuit against Coinbase, the largest crypto

exchange in the U.S. But those moves have had little impact on

crypto prices and some industry analysts say expectations about

Trump may have been too lofty.

In an executive order during his first week in office, Trump

ordered the creation of a cryptocurrency working group tasked

with proposing new digital asset regulations and looking into

creating a national crypto stockpile, to the dismay of some

investors who had hoped he would instruct the U.S. to start

buying bitcoin.

"The market is disappointed with that," said James

Butterfill, head of research at asset manager CoinShares.

Crypto prices are also facing headwinds from more hawkish

monetary policy and Trump's threat of tariffs, he added.

"That's increasing all this market uncertainty, which is

absolutely not helping bitcoin at all. Until we get (clarity on

a bitcoin reserve), I can't see prices recovering

significantly," said Butterfill.

Since a December peak, almost $1 trillion has been wiped in

nominal value from the global crypto market, with total market

capitalisation now around $2.76 trillion, according to

CoinMarketCap.

Some investors have had to reset expectations, with

preliminary reports from Trump's new crypto working group not

due for at least another month.

"The initial excitement surrounding the Trump

administration's perceived pro-crypto stance appears to be in a

phase of recalibration," said Gabe Selby, Head of Research at CF

Benchmarks, a digital asset index provider.

"For sentiment to shift more decisively, a clearer

regulatory framework or a major catalyst - such as additional

ETF (exchange traded fund) approvals or policy shifts - seems to

be necessary."

The SEC approved the first ETFs tied to the spot price

of bitcoin last year, which catapulted the cryptocurrency to a

new record high.

Still, some market watchers are as bullish as ever.

Standard Chartered analyst Geoff Kendrick is sticking with a

target for bitcoin to hit $500,000, against a record high of

$109,071, before Trump leaves office. He said central to that is

a belief new buyers will enter the market.

Regulatory filings in the U.S. showed that while hedge funds

remain the dominant crypto buyers, banks and sovereign wealth

funds are buying too, Kendrick added.

Quarterly filings showed that asset managers boosted

allocations to U.S. ETFs tied to the price of spot bitcoin in

the fourth quarter of 2024, with Mubadala Investment Co - an Abu

Dhabi sovereign wealth fund - reporting a stake in BlackRock's

iShares Bitcoin ETF worth $436.9 million.