Another 7-headed Bitcoin, the recent Bitcoin price has continued to decline, from a high of nearly $110,000 to a current drop of 34%. The funding rates of mainstream CEXs and DEXs have turned bearish across the board, and the market sentiment has fallen to an icy point.
But is this decline a preemptive warning of the crypto bear market, or the growing pains of the structural adjustment of the US economy? The answer may be more complex than it appears.
From a technical perspective, Bitcoin has broken through multiple key support levels, and institutional holdings have declined for four consecutive weeks. The VIX fear index has even exceeded 30. But the deeper reason may be directly related to the "uncertainty" of US economic policy. After Trump's return to the White House, "the US economic policy has been more uncertain than ever". This uncertainty has caused investors to oscillate between "buying the dips" and "stop-loss", exacerbating market volatility.
The correlation between US stocks and Bitcoin is undergoing subtle changes. In February 2025, the S&P 500 index gave back all of its post-election gains, while Bitcoin fell more than 15% during the same period. This reflects investors' overall withdrawal from "risk assets": as expectations of an economic recession heat up, US dollar assets (US stocks) and "digital gold" (BTC) are being sold off simultaneously, forming a "stock-coin double kill" pattern.
The Growing Pains of US Economic Adjustment: Three Major Challenges of Trump's New Policies
The core of the Trump administration's policies has always revolved around "America First", but the implementation of its economic agenda is facing multiple complex challenges, which could not only trigger short-term market turmoil, but also reshape the long-term financial landscape.
1. The Double-edged Sword Effect of Trade War and Tariff Policies
Trump has restarted the policy of raising tariffs on economic entities such as China and the EU, trying to revive US manufacturing through trade barriers. However, this policy has directly led to increased uncertainty in the global supply chain, a plunge in US bond yields, and a rapid withdrawal of capital from risk assets. For example, in February 2025, after Trump announced a 25% tariff on Mexico, BTC plunged more than 7% in a single day. The side effects of the trade war not only impact the traditional market, but may also force capital to flow into "safe-haven assets" such as BTC. However, short-term panic sentiment often triggers a sell-off, forming a vicious circle of "policy tailwinds turning into headwinds upon implementation".
2. The Tug-of-War Between Fiscal Deficits and US Dollar Credit
Trump has continued his tax cut and fiscal stimulus policies, and the US national debt has reached nearly $40 trillion, exacerbating market concerns about the long-term value of the US dollar. If the Fed is forced to restart quantitative easing (QE), the flood of liquidity may benefit crypto assets; but if rate cuts are delayed, BTC may retreat to $70,000. This policy contradiction has made the crypto market a "thermometer" for the US dollar credit game.
3. The Oscillation of the US Dollar Strategy and the Pragmatism of Crypto Policies
On the one hand, Trump is trying to consolidate the hegemony of the US dollar through a BTC strategic reserve, and on the other hand, he has disappointed the market due to underperformance in policy implementation (such as only designating the 200,000 confiscated BTCs as a reserve, rather than making new purchases). This "wanting both a strong US dollar and a foothold in crypto" oscillation has led to confusing policy signals.
Recently, in an interview with Fox News, Trump ruled out the possibility of the US economy shrinking and entering a recession this year, and acknowledged that his comprehensive economic agenda may cause short-term turmoil, but he believes it will drive future prosperity.
However, the White House summit last week, which was expected to bring crypto-related policies, only heard the crypto leaders' flattery of Trump and their self-proclaimed industry experience, without any substantive discussion results or clear policies, but instead "increasing the BTC reserve holdings at no cost to taxpayers". The government has no additional budget, and being able to cover a 200,000 BTC reserve is already good news.
Overall, Trump's strategic BTC reserve is definitely a long-term positive. As long as Trump's executive orders do not change from day to night, the next few years will be a friendly policy environment. Although there is no plan at the federal level to add millions of BTCs, if state-level proposals are passed, there may be real investment. The BTC confiscated by the US government will be deposited into the strategic BTC reserve and not sold, reducing the selling pressure on the market; on the demand side, the US government's strategic BTC reserve decision may attract more investors' interest in BTC, including some traditional financial institutions and large companies, which may eliminate their concerns about engaging in crypto business, and may even lead to more countries establishing strategic BTC reserves.
Conclusion
Under Trump's new policies, the US economy and the crypto market are experiencing the growing pains of "creative destruction". In the short term, policy oscillation, tightening liquidity, and fragile market sentiment may lead to a bear market, but in the long run, institutional breakthroughs and global financial changes may open up a trillion-dollar space for cryptocurrencies. The establishment of the US BTC reserve is both an expedient measure to maintain the hegemony of the US dollar, and may also sow the seeds to subvert the traditional financial system.
