In front of the White House, a cartoon of U.S. President-elect Donald Trump and cryptocurrency tokens is displayed to mark his inauguration at a Coinhero store in Hong Kong, China, on Monday, January 20, 2025. These images, captured by Paul Yeung for Bloomberg and shared by Getty Images, highlight an interesting backdrop for recent cryptocurrency market developments.
After Trump’s inauguration, cryptocurrencies, including Bitcoin, saw a significant downturn on Tuesday as the initial wave of optimism among investors began to wane. The TRUMP token, introduced last week as a nod to the new U.S. president, plummeted by 22% in just 24 hours, according to data from CoinGecko. Similarly, a meme token released on Sunday by first lady Melania Trump suffered a 58% drop in one day.
Bitcoin’s value fell about 5%, landing at $102,589, while other major cryptocurrencies like Ether and XRP also saw declines of 3% and 5%, respectively. Despite initial enthusiasm among crypto investors due to Trump’s entry into the White House, fueled by his promises of favorable policies and a potential federal bitcoin reserve, the market response was tepid.
Investors were hopeful that Trump’s administration might endorse cryptocurrencies through supportive regulatory measures. However, the inauguration ceremony on Monday did not bring any new announcements about the sector, leading to a dampened mood in the crypto market by Tuesday.
Kenneth Lamont from Morningstar highlighted the risks involved with diving into the cryptocurrency market without adequate understanding. In a statement on Tuesday, he advised investors to be cautious. “While there is potential for growth if Trump fulfills his campaign promises, investors must avoid the trap of fear of missing out and exercise restraint,” Lamont noted.
The inherently volatile nature of cryptocurrencies is well-known. Bitcoin, the most prominent digital currency, has often seen swings of several thousand dollars in a single day. Altcoins like Ether and XRP tend to be even more unpredictable. “Fear of missing out shouldn’t drive investment decisions. The promise of easy wealth is tempting, but many retail investors struggle with timing, often entering and exiting the market at inopportune moments,” Lamont added.
