The cryptocurrency market is experiencing a sharp downturn as Bitcoin (BTC) and Ethereum (ETH) prices drop, with traders reacting negatively to President Donald Trump’s Strategic Bitcoin Reserve order and increasing global trade tensions.

Bitcoin has fallen 4.8% to $81,729, while Ethereum has dropped 8%, sinking near $2,000—a level not seen since November 2023. The broader market is also in turmoil, with Dogecoin leading losses among top altcoins, plunging 13% to $0.16.

Despite what should have been a bullish move—Trump’s order establishing a Strategic Bitcoin Reserve—the market reaction has been the opposite. Instead of soaring prices, investors have started selling off, leading to fresh volatility. But why?

Why Is the Market Falling?

The answer lies in disappointed expectations. The crypto community had hoped that Trump’s executive order would result in large-scale Bitcoin acquisitions by the U.S. government, driving demand and pushing prices higher. However, the actual order does not include immediate purchases.

Instead, it directs U.S. officials to create “budget-neutral” strategies for building a government-controlled Bitcoin reserve, meaning that no taxpayer funds will be allocated for spot purchases—at least in the short term.

This revelation has caused uncertainty, with some investors taking profits after Bitcoin’s recent surge above $92,000 last week. Others worry that without immediate government buying, demand could stagnate.

According to Singapore-based trading firm QCP Capital, the knee-jerk reaction lower “likely stems from the realization that no actual budget has been allocated for Bitcoin purchases in the near term.”

Similarly, David Lawant, head of research at FalconX, noted that many investors had overestimated the policy’s short-term impact and were now reassessing their expectations.

Trade Tensions Add to Market Volatility

Adding fuel to the fire, escalating U.S. trade tariffs have created additional uncertainty in global markets. The Biden administration’s recent tariffs on Asian imports have raised fears of an economic slowdown, impacting liquidity and investor sentiment.

Trade restrictions can have far-reaching consequences, affecting the global flow of capital and interest rates, which in turn impact riskier assets like cryptocurrencies. Investors are now shifting to a wait-and-see approach, waiting for more clarity on both U.S. trade policy and the Federal Reserve’s next interest rate move.

Dogecoin and Altcoins Suffer Heavily

While Bitcoin and Ethereum have faced sharp declines, altcoins have been hit even harder. Dogecoin, which had gained momentum in recent weeks, has plunged 13% to $0.16, making it the worst performer among the top 10 cryptocurrencies.

Will Bitcoin and Ethereum Recover?

Despite the ongoing decline, some analysts believe that this downturn is a healthy market correction rather than the start of a prolonged bear market.

Bitcoin remains up over 50% year-to-date, and Ethereum’s upcoming network upgrades could drive renewed investor interest in the coming months.

For now, the market will likely remain highly volatile, with Bitcoin facing key support levels at $78,000 and Ethereum hovering around the $1,900 mark. If Bitcoin fails to hold above these levels, it could trigger a deeper selloff, pushing prices toward $75,000 or lower.

Investors are also closely watching inflation data and Federal Reserve policy decisions this week, as these could significantly influence crypto market sentiment.

Final Thoughts

The crypto market is at a crucial crossroads. Trump’s Strategic Bitcoin Reserve has generated excitement but lacks immediate impact, leading to short-term selling pressure. Meanwhile, trade tensions and macroeconomic uncertainty continue to weigh on sentiment.

While Bitcoin and Ethereum’s long-term outlook remains strong, the next few weeks could be turbulent as the market adjusts to these developments. Traders should brace for more volatility before the next major move unfolds.