Financial Insights That Matter
02/03 update below. This post was originally published on February 2
Bitcoin and crypto prices have stalled after soaring higher following Donald Trump’s U.S. presidential victory—with fears suddenly emerging the $4 trillion crypto bubble could be about to pop.
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The bitcoin price has surged to almost $110,000 per bitcoin, helped by Elon Musk’s leaked plans for crypto in the White House.
Now, as one legendary bitcoin trader warns of a looming “financial crisis,” Federal Reserve chair Jerome Powell has flung the door open for Wall Street to further adopt bitcoin and crypto.
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U.S. Federal Reserve chair Jerome Powell has told banks they are permitted to offer bitcoin and … [+]
“Banks are perfectly able to serve crypto customers as long as they can understand and service the risks,” Powell said at a press conference this week after the Fed paused its interest rate cutting cycle.
Wall Street banks “have to be pretty sure” their bitcoin and crypto activities are “safe and sound,” Powell added.
02/03 update: Crypto prices have taken a huge step lower, wiping around $300 billion from the combined market that has been hard hit by the rapidly escalating trade war sparked by U.S. president Donald Trump’s volley of tariffs on goods entering the U.S. from China, Canada and Mexico.
The tariffs, due to come into effect Tuesday morning, have also hit global stock markets, with investors balking at the prospect of tighter trading conditions.
“A tidal wave of fear, uncertainty and doubt (FUD) has been unleashed across the cryptocurrency market after U.S. president Donald Trump’s Friday tariff announcement,” Petr Kozyakov, chief executive crypto payment platform Mercuryo, said in emailed comments.
“The prospect of prolonged higher interest rates has rattled all global markets. While bitcoin has dropped below the $100,000 mark the King of Crypto is once again proving itself to be in a class of its own in marked contrast to altcoins bleeding dark red across the board.”
Bitcoin plummeted overnight to just over $91,000, down almost 10% at its lowest, before rebounding to around $95,000. Other major cryptocurrencies have seen far steeper declines, with ethereum down around 20% before recovering slightly and Ripple’s XRP and ethereum rival cardano trading around similar levels.
Solana, ethereum’s biggest rival, has fared better, off by just 6% and exacerbating fears among ethereum holders that it could seize the altcoin crown.
However, crypto traders have cheered analysis from Bitwise’s investment guru Jeff Park, posted to X, who has outlined his thesis on why the coming trade war could be good for bitcoin.
“Tariffs might be just a temporary tool, but the permanent conclusion is that bitcoin is not only going higher—but faster,” Park wrote, adding: “While both sides of the trade imbalance equation will want bitcoin for two different reasons, the end result is the same: higher, violently faster—for we are at war.”
Wall Street giants, led by the world’s largest asset manager BlackRock, have leaned into bitcoin and crypto over the last year with a fleet of spot bitcoin exchange-traded funds (ETFs) helping to normalize bitcoin and crypto among the financial establishment.
Powell’s comments mark a major shift in sentiment under Trump from the previous Biden administration that was hostile toward crypto.
Under Biden, bitcoin and crypto companies complained of an unofficial policy to “debank” them, cutting off basic financial services and making it impossible to operate—which became known as “Operation Choke Point 2.0,” a reference to a previous U.S. government policy to cut off industries believed to be at high risk of fraud and money laundering.
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The bitcoin price has rocketed higher over the last year, topping $100,000 per bitcoin and driving … [+]
Trump’s adoption of bitcoin and crypto—starting with his non-fungible token (NFT) collections, growing to support for a U.S. bitcoin national stockpile and culminating with the launch of a controversial Trump-branded memecoin—has led to regulators and government agencies reversing their opposition to the technology.
Meanwhile, Trump has followed through with his campaign promise to put steep tariffs on goods coming into the U.S. from Canada, Mexico, and China, setting the stage for a trade war that could spread around the world.
Trump’s executive order will impose 25% tariffs on imports from Canada and Mexico, with a 10% tariff on Canadian energy and oil, and an additional 10% tariff on China, due to go into effect on Tuesday morning.
“Gold, silver, bitcoin may crash,” Robert Kiyosaki, investor and author of advice book Rich Dad Poor Dadposted to X, pointing to Trump’s tariffs as the catalyst. “Good. Will buy more after prices crash. Real problem is debt, which will only get worse. Crashes mean assets are on sale. Time to get richer.”
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