BTCUSD on a roller-coaster drive amid Trump policy flip-flop

·       Wall Street recovered mid-Tuesday of hopes of softer Trump trade policy, tax cuts stimulus, Ukraine mineral deal, and progress of ceasefire

·       But on early Wednesday, Wall Street Futures again slid on the concern of an imminent recession after a terrible ADP private payroll report, indicating Trump policy uncertainty

·       Early Wednesday Asian session, Wall Street Futures  also boosted by talks of Chinese stimulus

In the last few weeks, cryptocurrencies such as BTCUSD are on a roller-coaster move amid Trump policy flip-flop, and regulatory development.  A key figure in this landscape is U.S. President Trump, whose shifting stance on cryptocurrencies—from skepticism to enthusiastic support—has contributed to extreme volatility.

Recent Volatility of Bitcoin (BTCUSD)

Bitcoin, the leading cryptocurrency by market capitalization, has exhibited pronounced volatility in recent months. Following Trump’s election victory in November 2024, Bitcoin surged, breaking the $100,000 mark for the first time in early December and peaking above $109,000 ahead of his January 20, 2025, inauguration. This rally, often dubbed the "Trump Pump," was fueled by optimism over his pro-crypto campaign promises. However, the momentum has since faltered. By early March 2025, Bitcoin had dropped to around $86000, down almost 21% from its January peak, erasing much of its post-election gains amid no real policy announcement by Trump and various crypto-related scams including ‘pump & dump’ schemes by professional scammers.

Other cryptocurrencies, such as Ether (ETH), have followed suit, with ETH declining over 40% since December 2024. Meme coins tied to Trump, including his $TRUMP token, have also seen dramatic swings, falling 80% from a January high. The total crypto market has shed nearly $1 trillion in value (market capitalization) since December, reflecting a broader cooling of the Trump-fueled euphoria.

Drivers of Volatility

Several factors have contributed to this volatility:

Macroeconomic Pressures: Rising U.S. Treasury yields (reaching 4.67% in early January) stronger-than-expected economic data and Trump’s austerity policies have shifted investor preference toward safer assets, pressuring speculative investments like cryptocurrencies. Expectations of a Federal Reserve pause on interest rate cuts and higher USD have further dampened risk appetite.

Trade Policy Uncertainty: Trump’s threats of tariffs on major trading partners—Canada, Mexico, China, India, and the European Union (EU)—introduced additional market uncertainty and higher USD. Bitcoin fell from $105,000 to $92,000 in early February following these announcements, though it partially rebounded after tariff pauses were negotiated with Mexico and Canada.

Regulatory Expectations: The crypto market has been highly sensitive to signals from the Trump administration. While an executive order on January 20 established a working group to explore a U.S. crypto stockpile, the lack of immediate action—such as direct Bitcoin purchases—disappointed investors, triggering sell-offs.

Higher Gold & lower Crypto: The unprecedented rally in Gold and new life time highs almost every other day in the last few months amid escalating geo-political uncertainty, rising public deficit, public debts and currency devaluation is boosting Gold. Although as a trade war currency, the USD is getting some strength amid the Trump trade war tantrum, at the same time, Trump trade war, immigration and deportation policies may cause higher inflation, positive for Gold. Overall, higher Gold is negative for Cryptos like BTCUSD, often seen as ‘Digital Gold’.

In December’24, BTCUSD topped 100K after Powell termed it as ‘virtual gold’ and a competitor of Gold, not USD; Trump’s Crypto optimism also helped the Bitcoin bubble.

Recent Surge and Pullback

On March 2, 2025, Trump’s Truth Social post hinting at a "strategic reserve" including Bitcoin, Ether, XRP, Solana, and Cardano sparked a brief 20% surge in BTCUSD, pushing it from late February lows to $89,359. However, by March 3, the price retreated to $86,292 as skepticism grew over the feasibility and funding of such a reserve, highlighting the market’s reactivity to political cues.

Trump wrote in his Truth handle:

“A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA. I will make sure the U.S. is the Crypto Capital of the World. We are MAKING AMERICA GREAT AGAIN!

And, obviously, BTC and ETH, as other valuable Cryptocurrencies, will be the heart of the Reserve. I also love Bitcoin and Ethereum!”

In January 2025, President Trump signed Executive Order 14178, titled "Strengthening American Leadership in Digital Financial Technology." This order revoked the previous administration's directives, prohibited the establishment of a central bank digital currency (CBDC), and established a group tasked with proposing a federal regulatory framework for digital assets and digital financial technology (like blockchain, distributed ledger etc) within 180 days. Trump, by this order, seeks to guarantee a USD-based / or backed stable coin as the world’s reserve digital currency (CBDC).

Trump’s Cryptocurrency Policy Flip-Flop

Historical Skepticism

Trump’s relationship with cryptocurrencies has undergone a dramatic transformation. During his first term (2017–2021) and into 2021, he was a vocal critic, labeling Bitcoin a "scam" and "disaster waiting to happen." In 2019, he argued that cryptocurrencies were "not money," volatile, and facilitated illegal activities, emphasizing the primacy of the U.S. dollar. As recently as August 2021, he told Fox Business that Bitcoin seemed "like a scam" and should be heavily regulated.

Trump’s Shift to Pro-Crypto Stance due to electoral politics?

This stance began to shift in early 2024 as Trump eyed a return to the presidency. By March 2024, he acknowledged Bitcoin’s growing entrenchment, telling CNBC he was "not sure I’d want to take it away at this point." By May, ahead of the Libertarian Party’s convention, he declared himself "very positive and open-minded" about crypto, vowing to protect it from Biden’s regulatory "crusade." His July 2024 speech at the Bitcoin Conference in Nashville marked a full reversal, promising to make the U.S. the "Bitcoin superpower" and "crypto capital of the planet."

Campaign Promises and Actions

Trump’s 2024 campaign leaned heavily on pro-crypto rhetoric, including pledges to:

·       Establish a national Bitcoin stockpile

·       Loosen regulations and replace SEC Chair Gary Gensler, a known crypto skeptic

·       Foster innovation with rules written by industry allies

Post-election, Trump launched personal crypto ventures, such as the $TRUMP meme coin and World Liberty Financial, raising ethical concerns but reinforcing his stake in the sector. His January 20 executive order created a working group to propose regulations and explore a stockpile, though it stopped short of immediate Bitcoin purchases. On March 2, 2025, he named specific cryptocurrencies for a potential reserve, reigniting market interest.

Motivations behind Trump’s Crypto policy Flip-Flop

Political Support: Outreach to crypto enthusiasts and executives—like the Winklevoss twins, who donated $1 million each in Bitcoin—secured campaign backing and voter turnout pledges (e.g., $100 million and 5 million voters from Bitcoin miners).

Personal Gain: Trump’s ventures, including $TRUMP (peaking at $74.59) and World Liberty Financial ($300 million raised), suggest a profit motive, blurring lines between governance and self-interest (conflict of interest).

Electoral Strategy: Embracing crypto-outflanked rivals Biden and Robert F. Kennedy Jr., appealing to a young, tech-savvy voter base.

Interplay Between Volatility and Trump’s Policies

Short-Term Market Reactions

Trump’s pro-crypto pronouncements have consistently triggered short-term price spikes. The November 2024 election win drove Bitcoin from $75,000 to $93,000 in days, while his March 2, 2025, reserve announcement spurred a 20% jump. However, these gains have proven fleeting without concrete policy follow-through, as seen in the subsequent pullbacks.

Long-Term Uncertainty

The lack of clarity on Trump’s plans—whether the reserve will use seized assets or taxpayer funds, and how regulations will evolve—has fostered caution. Critics warn that a broad reserve including altcoins could enrich insiders at public expense, while others note Trump’s tariff threats counteract Crypto appeal as a risk asset.

Market Sentiment

Trump’s moves may be a "double-edged sword," driving hype but risking volatility, while others anticipate regulatory clarity as a stabilizing force. The market’s sensitivity to his statements underscores Crypto’s speculative nature and reliance on political momentum.

Recent Volatility of BTC/USD

In February 2025, Bitcoin's price declined by over 17%, marking its most significant monthly drop since June 2022. This downturn coincided with record outflows from Bitcoin exchange-traded funds (ETFs), totaling $3.3 billion.  The crash may be attributed to a broader risk-off sentiment among institutional investors amid Trump policy uncertainty. Despite these outflows, ETFs have contributed to increased liquidity and reduced volatility in the Bitcoin market. Additionally, the supply of Bitcoin held by long-term investors has decreased notably since November 2024, further contributing to the recent price downturn.

Subsequently, on March 2, 2025, President Trump announced the formation of a "Crypto Strategic Reserve" through a series of Truth social media posts. This reserve is set to include Bitcoin and Ether as core assets, along with other cryptocurrencies such as XRP, Solana (SOL), and Cardano (ADA). The administration's objective is to position the United States as the "crypto capital of the world" and support the growth of the digital asset industry. This announcement led to a brief surge in cryptocurrency prices, with assets like Solana, Cardano, and XRP experiencing notable gains. However, these price increases were short-lived, with values returning to pre-announcement levels by the following Monday afternoon.

The market is concerned about the potential implications of these policy shifts. Some argue that the inclusion of certain cryptocurrencies in the strategic reserve may be influenced by political donations from crypto companies supporting pro-crypto candidates. Additionally, the volatility inherent in cryptocurrencies poses challenges to their inclusion in national reserves.

The market's anticipation of moderate to high volatility is supported by tools like the CAPIVIX, which measures expected annualized volatility. With a CAPIVIX reading of around 62.76%, the market expects Bitcoin's price to fluctuate by approximately 18.13% over 30 days!

In summary, Bitcoin's recent volatility is a result of both market factors and significant policy changes under President Trump's administration. The establishment of a Crypto Strategic Reserve marks a notable shift in the U.S. government's approach to digital assets, reflecting the dynamic and evolving nature of the cryptocurrency landscape.

President Trump has undergone a significant shift in his stance on cryptocurrencies. Initially skeptical, he has now become a proponent of the industry. Trump's announcement to create a "crypto strategic reserve" akin to the U.S. gold and oil reserves has been a pivotal moment in this shift. This policy aims to make the U.S. a hub for cryptocurrencies, potentially boosting their adoption and value. However, Trump's embrace of cryptocurrencies has raised ethical and legal concerns. Critics argue that his close ties to the industry could lead to conflicts of interest and benefit specific investors rather than the broader public. Despite these concerns, Trump's pro-crypto policies have fueled optimism in the market, leading to an unusual volatility.

Impact of Trump's Policies on Crypto Markets

Trump's pro-crypto stance has contributed to heightened market activity and optimism. The creation of a crypto strategic reserve and supportive regulatory environment has encouraged institutional investment and retail participation. However, this increased activity also brings volatility, as seen in early 2025 when the market surged but later faced setbacks due to the lack of any specific policy announcement in the subsequent Trump speech at CAPC and also at the SOTU.

On Wednesday, March 05, 2025, the US Commerce Secretary Howard Lutnick said:

·       Bitcoin to be treated differently from altcoins in US crypto reserve

·       The President thinks that there's a bitcoin strategic reserve

·       Now there will be the question of, how we handle the other cryptocurrencies.

·       And I think the model is going to be announced on Friday when we do that

Conclusion

The recent volatility in cryptocurrencies, particularly Bitcoin, is influenced by a mix of market dynamics and political factors. Trump's policy shift towards supporting cryptocurrencies has injected optimism into the market but also raised concerns about volatility and potential conflicts of interest. As the crypto market continues to evolve, investors must navigate these challenges while considering the potential for significant growth and mainstream adoption.

Bitcoin and the broader cryptocurrency market have navigated a rollercoaster in early 2025, with Trump’s policy flip-flop acting as both catalyst and constraint. His transition from critic to "crypto president" has fueled volatility, with BTCUSD soaring on promises and retreating on delays. While his administration’s pro-crypto tilt offers growth potential, the absence of actionable steps, combined with external pressures like tariffs and monetary policy, keeps the market on edge. Moving forward, investors should monitor regulatory developments and Trump’s ability to deliver, as these will shape whether the "Trump Pump & Dump" sustains or fizzles amid ongoing volatility.

Bottom line:

Crypto or Bitcoin is a bubble, but traders, having professional trading expertise, may trade the same in a limited way as per his/her financial capacity and risk-taking ability; usually, any USD positive news turns out to be negative for BTCUSD and vice-versa.

Weekly-Technical trading levels: DJ-30, NQ-100, Gold and BTCUSD

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 43850) now has to sustain over 44050 for any further rally to 44250/44400-44500/44800 and 45000/45200-45300/45500 and 45700/45800-45900/46000 in the coming days; otherwise sustaining below 44000, DJ-30 may again fall to 43800/43675-43300/43150 and 42800/42700-42000/41900 in the coming days.

Similarly, NQ-100 Future (20915) has to sustain over 21050 for a further rally to 21300/21500-21700/21850 and 22050/22200-22350/22500 and 22700/23000-23300/23500 in the coming days; otherwise, sustaining below 21000, NQ-100 may again fall to 20900/20600-20400/20150 in the coming days.

Also, technically Gold (CMP: 2855) has to sustain over 2830 for a further rally to 2870/2905-2925/2955 and 2965/2975-3000/3025 and 3050/3075; otherwise sustaining below 2825 may further fall to 2810/2795-2780/2765 and 2745/2725-2695/2665 and further 2635/2600-2585/2560 in the coming days.

Similarly, BTSUSD (CMP: 90000) now has to sustain over 95000 for a further rally to 98000/10000-103000/105000 and 108000/110000 levels for the next leg of the rally, otherwise, sustaining below 94000/94500, may again fall to around 90000/88000-86000/84000 and 82000/80000-78000/75000 and 73000/60000-50000/44000 and 35000/33000 in the coming days.