This was supposed to be crypto's year.
President Trump got elected vowing to make the U.S. "the crypto capital of the world" — and by many measures, he delivered.
From the crypto-friendly regulators he appointed to major legislation passed by the Republican-led Congress, the government has been removing roadblocks for the sector while allowing crypto to become more closely integrated into the country's financial system.
For example, Trump picked Paul Atkins, a consultant who has worked with the crypto industry, as his new chair of the Securities and Exchange Commission, the primary federal agency that supervises the financial sector.
The GENIUS Act, which Congress passed this year, established rules for a growing area of crypto called stablecoins — a digital currency that allows for almost instantaneous transfers between parties anywhere in the world. The moment represented a major legislative victory for the crypto industry, which spent hundreds of millions of dollars in 2024 to elect crypto-friendly lawmakers.
Trump and his family also launched their own crypto ventures, from bitcoin mining to crypto financial services to the $TRUMP meme coin — although those moves raised deep ethical concerns among some people who worried that Trump was profiting from his presidency or creating a conflict of interest, a claim the White House strongly denies.
"The media's continued attempts to fabricate conflicts of interest are irresponsible and reinforce the public's distrust in what they read. Neither the President nor his family have ever engaged, or will ever engage, in conflicts of interest," said White House press secretary Karoline Leavitt in an emailed response to NPR.
"Through executive actions, supporting legislation like the GENIUS Act, and other common-sense policies, the administration is fulfilling the President's promise to make the United States the crypto capital of the world by driving innovation and economic opportunity for all Americans," she added.
And for a long stretch of the year, crypto markets boomed. The value of bitcoin nearly doubled from when Trump was elected in November 2024 to its all-time high of around $126,000 per coin in October.
Then, it all came undone.
Today bitcoin is trading at around $87,600, down about 30% from its peak, though it's attempting a comeback.
So what went wrong? Here's a look at why crypto soared — and then crashed.
The Trump factor
Trump was a game changer for the crypto sector — until he wasn't.
The crypto crash started on Oct. 10 when Trump threatened to impose an extra 100% tariff on Chinese imports — on top of the 30% already in place. That spooked traders to dump risky investments, from stocks to bitcoin. For those in the crypto industry, it was a reminder that Trump can be a double-edged sword.
Trump eventually backed down from his tariff threat, leading to a recovery in most financial markets.
But not cryptocurrencies such as bitcoin, which remain in the doldrums.
Big bets – and big losses
A big reason why crypto has yet to recover is that its losses were felt much harder than they were in stock markets.
Trump's election and the optimism about a game-changing year for crypto helped turbocharge rampant speculation and encouraged investors to take big risks. Many investors not only traded cryptos, they also borrowed heavily to scoop up even more cryptocurrencies in a process known as leveraging.
A common way investors did that was by pledging some of their existing crypto investments as collateral for loans — similar to how people can take out bank loans by putting up their home as collateral.
That leverage magnified their gains when crypto was surging. But it also magnified losses when markets started tumbling.
The heavy losses inflicted by the October sell-off have left many investors wary of piling back into the sector.
Bitcoin, for example, has continued to decline and is now down about 6% for the year. By contrast, the S&P and the Dow Jones Industrial Average went on to hit record highs in December and each ended 2025 with double-digit gains.
Alex Thorn, who heads research at crypto firm Galaxy Digital, acknowledges all that leverage proved "very damaging," leading to sharp losses.
"It was definitely a straw that broke the camel's back here for sure," he says.
Crypto has a history of booms – and busts
The crash also was a reminder of the boom and bust cycle that has afflicted the sector throughout its short history.
The crypto industry, for example, entered 2022 brimming with hope. The pandemic had helped spark a surge in trading from people stuck at home, leading to a frenzy that boosted all kinds of speculative investments, from cryptocurrencies to digital tokens called NFTs.
But then a series of events, including rate hikes by the Federal Reserve, ushered in a period of intense volatility that eventually led to the collapse of crypto exchange FTX, which in turn sparked a downturn, or "winter," in crypto parlance. In 2022, the value of bitcoin fell from about $50,000 a coin to under $20,000. That downturn didn't fully reverse until late 2024 with Trump's re-election.
Similarly, in the months leading up to 2018, there was a frenzy of investments on initial coin offerings — in which cryptocurrencies were sold similarly to how companies sell shares during initial public offerings. After peaking in January 2018, the crypto market crashed.
Mark Hays, a consumer finance advocate at Americans for Financial Reform, says that the most recent crash is yet another reminder that crypto has long relied on rampant risk-taking.
"These markets thrive on speculation," he says. "Things are good as long as the music keeps playing."
"But," he adds, "sooner or later when those notes kind of die out and the tide goes out, as it were, it exposes the vulnerabilities and fragilities in these markets."
Optimism about the future
Many in the crypto industry retain hope that this time, the market will recover more quickly, partly because they believe the industry has matured.
"It's not going to be a winter in terms of a mass shift again," says Adam Morgan McCarthy, a senior research analyst at crypto firm Kaiko. "It's more of an industry now. So if there is a winter or a downturn, it's not going to be a complete lights-out moment."
For one thing, many in the industry believe regulators, such as those in the SEC under Atkins, are much more supportive of the industry.
Congress is also growing more supportive. After spending heavily in 2024, the sector is now amassing another huge pile of money to spend in the 2026 midterm elections to once again try to elect more crypto-friendly members.
Crypto companies believe lawmakers could soon pass another critical piece of legislation that would determine, among other things, which regulator will oversee the sector. The House already passed a version of the bill, called the CLARITY Act, that would switch much of the regulatory oversight of the crypto industry to a smaller regulator called the Commodity Futures Trading Commission.
The Senate Banking Committee is now considering its own version of the bill.
There are also signs of growing acceptance by more established Wall Street players. According to Bloomberg, JPMorgan Chase, the world's biggest bank, is reportedly considering offering crypto trading to its institutional clients.
For McCarthy, developments like these signal increasing integration and stability.
"The guardrails are there. The regulators are comfortable. The banks are comfortable. Firms are comfortable," he says.
To critics like Hays, however, this is more cause for alarm. As crypto companies more closely integrate themselves into the financial sector, it raises the possibility that the next crypto crash could take more mainstream markets down with it.
"We see all the ingredients necessary to set up financial crises or collapses, either rooted in or amplified by crypto, that parallel what we saw in past crises," says Hays.
Thorn, at Galaxy Digital, sees no reason to get excessively pessimistic, saying that would be ignoring how many inroads crypto has made towards becoming a more established investment.
But he acknowledges things are uncertain. "You know," he says, "you can't have great gains without occasional pains."
Looking back on 2025, it's hard to say how long the current downturn will continue, or how occasional pains like these will actually be.
But for now, one thing's apparent: Once again, this was meant to be crypto's year. And once again, it hasn't turned out that way.
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