The price of Bitcoin fell sharply to the support of $60,000 in the first strong signal of bearish activity, after giving up all its gains on the Trump rally – but is Trumpism in crypto the root of crypto’s problems?
There is certainly a lot of optimism in the air as the European session opens this morning, with Bitcoin trading above $66,400.
But all the factors that caused the crash are still very much at play. Crypto leverage, tech-heavy trading, high-risk asset correlations and Bitcoin’s narrative skepticism are all in the mix for a bear market.
Fire up your Bloomberg terminal and create a chart showing the correlation between Bitcoin (XBT/USD), the Magnificent 7, technology stocks (BM7T) and the Bloomberg AI Value Chain Total Return Index (BAIVT) and you’ll see the following (thanks to Kathleen Brooks, director of research at brokerage XTB):
Brooks explains what is happening here: “Bitcoin trading is also interesting, since bitcoin and Nasdaq tend to move together, and their positive correlation is 40%. This is a moderate positive correlation, however, the correlation between bitcoin and Bloomberg’s stock of AI has a close positive relationship, at 62%.
“This suggests that when Bitcoin moves, it has an impact on AI stocks. The reason for this is the availability of funds. In recent years, capital purchases have flowed into digital assets and advanced technology stocks at the same time. This means that both asset classes share a strong financial link, influenced by changing liquidity patterns.
“So, when bitcoin gains strength, this flows into AI stocks, and when the price of bitcoin falls, this downward pressure can weigh on tech stocks.”
But what about the Trump factor? I asked Brooks for his take: “I think the Trump family’s crypto interests are grubby, but I don’t think that’s the main reason investors have abandoned crypto in recent months.
Billionaire GOP Donor Ken Griffin Criticizes Trump Administration For ‘Enriching’ Family Members pic.twitter.com/xbz9zrRJAR
– Forbes (@Forbes) February 4, 2026
“I think that Trump’s policies, his threats to take Greenland by force, abandoning his allies, and threatening the independence of the Fed are actually hurting the crypto environment.
“Crypto still has very limited uses, so when a geopolitical vision/order is proposed by the US President with an America First agenda, this makes it less attractive to hold.”
Brook then turned to what he sees as the technical factors at play: “In the past few months, investors have been very wary of high-end assets, crypto has been the first asset where valuations look stretched and investors are selling their stakes, with few buyers able to take the dip.
“This is happening with silver now and to a lesser extent with gold. Therefore, the crypto sell-off is part of a market-wide event where traders and investors are re-evaluating valuations and how much risk they are willing to take on rich value assets.”
Bitcoin needs to hold above $58,000 and $60,000
At the end of the Asian session, Allen Ding, head of research at Bitfire, a Hong Kong-licensed asset manager, issued a note explaining the critical market situation heading into the weekend.
He thinks that if Bitcoin does not hold $60,000 or $58,000, a deep correction is in the cards.
“Technically, Bitcoin accelerated its decline after breaking the key support of $74,000. Although the oversold conditions indicate a short-term jump, the focus shifts to the weekly EMA240 and the $60,000 level as the next important support,” Ding explained.
He concluded that we are witnessing the unraveling of the support mindset around high-risk assets. He notes, “Great volatility in global risk assets, falling silver prices and Korean stocks accompanied the fall of the Nasdaq.
“Financial expectations changed, prompting a broad retreat from risk assets, while Bitcoin ETFs saw continued outflows, the negative Coinbase premium widened, and institutional bids weakened.
A wave of Ethereum liquidations, fueled by planned losses, has resulted in a sell-off. “
Chart: Bitcoin/USD Feb 5th 200-day SMA – Thanks to Kyle Rodda, Senior Financial Market Analyst at Capital.com.
DISCOVER: 20+ Next Crypto to Explode in 2026
Fed worried about change, Citadal Securities breaks cover on Trump
Let’s take out the part Ding said about the Fed’s choice – ‘Fed expectations have changed’ may seem like an understatement for this quarter. Kevin Warsh was listed as a contender, but his selection has added more uncertainty to the at-large position.
Warsh was previously considered a hawk. So, if his “I’m a low-level guy” strategy with President Trump looks thin on paper and starts to come down on the Fed’s bloated balance sheet, that doesn’t add up to an expansionary scenario. Trump’s plan is to throw money at voters before the end of November.
And that brings us back to the Trump Midas touch back that no one wants to talk about, or at least, not out loud.
One of my sources at Citadel Securities recently told me that the egrets were coming out about the Trump administration. Citadel is one of the largest market makers on Wall Street, and its manager, Ken Griffin, is a major Republican donor.
His company was responsible for the establishment of EDX markets in 2023 and later moved to the creation of crypto markets at the beginning of last year, taking its cue from the upcoming management relationship known for its crypto-friendliness.
While Griffin thinks Warsh will be a “strong” Fed pick that puts to bed concerns about Fed independence, he’s not sure what else the Trump White House will do. According to Bloomberg, Griffin broke the cover at a recent Wall Street Journal event:
Citadel’s Ken Griffin said the Trump administration’s tendency to reward loyalists does not play well with business leaders and criticized the president’s willingness to enrich his family while in office.
“A lot of CEOs don’t want to find themselves in the business of sucking up one executive,” Griffin said in an interview Tuesday at a Wall Street Journal event. When the U.S. government “tastes a choice,” he added, administrations worry that they can win or lose based on whether they support the administration.
At the very least, the interests of the Trump family are not helping crypto
While Brooks doesn’t buy the line that it’s all Trump’s fault, he admits that the administration’s actions and the “flawless” cooperation of the Trump family are not helpful in dealing with the background of the developments affecting the market.
If there is one definition that, for many, it sums up the Trump brand, it is grifting, and the danger is that it rubs off on crypto.
Businesses need national bodies they can trust to be fair and equitable when judging between competitors in the market. Crypto needs to rebuild faith in its issues or create use cases that achieve similar results. If crypto is seen as a way for the Trump family to enrich themselves at the expense of primarily retail investors, it will leave a bitter taste in the mouth.
Bringing the Law of CLARITY that really works for crypto and all market participants, and the emergence of killer applications, with the prediction market of Polymarket perhaps the first, can start to change it in a very good way for crypto.
In the meantime, leverage needs to be dismantled and the structure of the market adjusted, which in part requires Trump to come down – earlier in the week, he noted that he is a “big crypto guy” – and for his crypto companies to disappear. Sad, but here we are. Enough is enough.
The post Bitcoin Price Crash – Is It All Donald Trump’s Fault? appeared first on 99Bitcoins.
