Bitcoin halved, altcoins crashed, and retail investors who believe in the "Trump rally" are footing the bill.

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After the Trump administration’s high-profile commitment to building a “crypto capital” and the rapid rollout of compliant Wall Street products, retail investors betting on the “Trump rally” have been hit hard. Crypto asset prices have fallen sharply, and the volatility of the assets themselves has not decreased due to compliance.

At the time of writing, Bitcoin is quoted at $61,000, down more than 50% from its peak, erasing all the gains accumulated before and after Trump’s return to the White House. The market capitalization of altcoins other than BTC has dropped 51% from last October’s high (Taking into account the inflated market capitalization caused by token inflation, the actual price drop is even greater.) In the past week, the overall crypto market has lost at least $700 billion in value.

(BTC price down 51.78% from its peak, chart source: TradingView)

(Altcoin market capitalization excluding BTC down 50.88% from its peak, chart source: TradingView)

Capital outflows are happening simultaneously. According to Bloomberg data, over $740 million flowed out of more than 140 crypto-themed ETFs on Wednesday alone, with cumulative net outflows approaching $4 billion over the past three months. Glassnode notes that the average cost for US spot Bitcoin ETF holders is about $84,100, meaning many investors are currently in a floating loss position.

Market experts emphasize that a “pro-crypto” policy does not equal a price bottom. Nate Geraci, President of NovaDius Wealth Management, said that a pro-crypto government “won’t magically eliminate downside volatility.” Peter Atwater, founder of Financial Insyghts, pointed out that Washington often embraces deregulation when market sentiment is at its peak, so it’s not surprising to see a sharp drop afterwards.

The “Trump rally” premium fades, compliant products fail to hedge volatility

A contrast in this round of pullback is that retail investors have not only faced risks through exchanges, but have also entered via “Wall Street-approved” fund products. With pro-digital asset orders from the White House, regulators have greenlit a large number of exchange-traded products, and asset managers quickly rolled out ETFs covering mainstream tokens as well as riskier tokens, including thematic bets, speculative strategies, and yield wrappers.

But in the end, institutional endorsements provided more tradability and compliant channels, but did not change the inherently high volatility of the assets. As the market reversed, the speculative premium supported by optimism was squeezed out, and retail investors bore most of the repricing costs.

At the time of writing, Bitcoin has fallen more than 50% from its peak and is hovering around $61,000. At the same time, according to TradingView data, altcoin market capitalization is down 51% from October’s peak, and considering token inflation, the actual price decline is even greater.

On a broader level, the crypto market has lost at least $700 billion in value this past week. Bloomberg notes that this drop not only erased gains made before and after Trump regained the White House, it also ended the previous rally story fueled by policy expectations and regulatory green lights.

Prices fall below ETF cost lines, market begins capitulation selling

Liquidity is sending more direct stress signals. According to Bloomberg data, more than $740 million was withdrawn from over 140 crypto-themed ETFs in a single day on Wednesday, with three months’ total net outflows near $4 billion. Outflows and net asset declines are evident not only in spot Bitcoin funds, but also Ether, XRP, Solana and multi-token products.

The cost of holdings amplifies the pain. Glassnode says US spot Bitcoin ETF holders’ average entry price is about $84,100, much higher than current prices. This means many retail investors who got in via ETFs are now in loss territory on paper.

Bloomberg points out that as funds dry up, liquidity thins, and narratives stall, the market has entered a holding stalemate of “waiting for a new story or waiting for capitulation-style selling.”

Unlike veteran traders who have been through multiple cycles, this wave of incremental buyers entered post-institutionalization and regulatory validation, expecting an experience closer to mainstream assets. Now, the pullback in what was seen as a game-changer — ETFs — has instead accelerated the erosion of confidence.

Crypto investor Bruno Ver said the speed of the plunge caught many off guard, noting that investors who bought at the top are under greater pressure. In contrast, some ETF advocates still emphasize that this is a “normal correction cycle” for crypto assets, and the ETF’s role is to provide transparent, regulated access, not to eliminate risk.

Market conclusion: Washington can provide “legitimacy,” but cannot provide a “price bottom”

In this rapid pullback, the market’s clearest takeaway is: Policy can stimulate product supply, improve trading channels, and generate short-term sentiment premiums, but cannot prevent periodic deep corrections in high-volatility assets. As Nate Geraci said, downside volatility cannot be “eliminated” by the White House or regulators.

Peter Atwater interprets this round of market action as follows: Politicians and regulators often follow surging market sentiment and tend to loosen rules “when the party is hottest.” The current plunge is less a surprise and more a return to risk pricing as speculative premiums recede.

Risk warning and disclaimerMarkets are risky, investment needs caution. This article does not constitute individual investment advice and does not take into account any particular user's investment goals, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are appropriate for their own circumstances. Investing based on this article is at your own risk. ```