Cryptocurrency prices have taken a sharp downturn in recent weeks, erasing gains made following Donald Trump’s election victory. Bitcoin, the largest cryptocurrency, has dropped 21% from its peak on January 20, now back to pre-election levels. Other digital currencies like ether have seen even steeper declines, with ether down over 40% since December.

Expectations for a bullish market hinge on signals like potential interest rate cuts by the U.S. Federal Reserve or a clear pro-crypto regulatory framework from the Trump administration. Despite Trump’s promises to be a “crypto president” and establish a national bitcoin reserve, the market has yet to see significant positive developments.

The Securities and Exchange Commission under Trump has withdrawn investigations into crypto companies and dismissed a lawsuit against Coinbase, but these actions have not had a notable impact on crypto prices. Trump’s executive order creating a cryptocurrency working group has also left some investors disappointed, with uncertainty exacerbated by hawkish monetary policy and tariff threats.

While some analysts remain optimistic, others caution that a clearer regulatory framework or major catalysts like additional ETF approvals are needed for sentiment to shift decisively. Despite the market recalibrating its expectations, there is anticipation for new buyers entering the market, with hedge funds, banks, and sovereign wealth funds showing increased interest in cryptocurrencies.

Overall, the cryptocurrency market is currently facing challenges and uncertainties, with investors eagerly awaiting developments from the Trump administration and regulatory bodies to potentially drive a market recovery.