Managing Cryptocurrency Market Volatility
The Trump administration's approach to cryptocurrency in 2025 has been marked by an aggressive push to promote innovation and integration, positioning the United States as a global leader in digital assets. This shift contrasts sharply with the previous Biden administration's enforcement-heavy stance.
By January 19, 2025, Bitcoin had become the 19th most valuable cryptocurrency globally, with a total trading value nearing $13 billion. The cryptocurrency market, sensitive to official statements and legislative actions, saw a surge in value when President Trump launched his own memecoin, $TRUMP, on January 17, 2025. The coin, reportedly owned by 80% by CIC Digital LLC, quickly amassed a market valuation exceeding $5 billion within hours of its launch.
The Trump administration's regulatory approach has been decisive. On January 23, 2025, the administration revoked the Biden-era Executive Order and Treasury framework related to the development of a U.S. Central Bank Digital Currency (CBDC), outright prohibiting the creation of a U.S. CBDC. Instead, the administration established a Strategic Bitcoin Reserve composed of Bitcoin held by the Treasury Department from forfeitures and penalties, which cannot be sold and serve as U.S. reserve assets. A broader U.S. Digital Asset Stockpile was also created to hold other digital assets acquired similarly, though these assets can be sold under certain conditions.
The administration has also urged the signing of the GENIUS Act and other legislation aimed at promoting digital asset innovation and easing regulatory burdens. They urge financial regulators like the SEC and CFTC to clarify and expedite rules to enable orderly trading and adoption of crypto products. There is a clear intent to embed crypto in various sectors—taxes, retirement, mortgages—with calls for banking regulators to provide clarity on activities such as tokenization, custody, blockchain adoption, and stablecoin issuance. The administration advocates for neutral treatment of crypto in bank regulations and capital requirements, hoping to make it cheaper and easier for banks to offer crypto services.
The Trump administration is also urging the IRS and Treasury to eliminate crypto compliance hurdles for businesses and individuals, update tax rules to address blockchain innovations, and provide administrative guidance regarding small digital asset receipts. Congress is urged to classify digital assets as a new asset class under existing securities and commodities tax rules with appropriate modifications.
A working group on Digital Asset Markets, chaired by a presidential adviser, coordinates policy across agencies, recommending prompt use of existing regulatory powers to clarify digital asset trading rules and promote innovation.
However, the introduction of personal tokens by the President and First Lady has raised ethical concerns among experts, particularly regarding potential conflicts of interest and the implications of foreign entities purchasing these tokens. Market participants are advised to stay informed about policy developments and exercise caution given the inherent volatility and speculative nature of the cryptocurrency market.
Investors can manage risk by utilising stop-loss and take-profit orders, regularly rebalancing their portfolios, and diversifying investments across various asset classes such as stocks, bonds, and other cryptocurrencies. Dollar-cost averaging, involving investing a fixed amount of money into Bitcoin at regular intervals, can also help reduce the impact of volatility.
As the Trump administration continues to shape the U.S. as a global leader in digital assets, it is crucial for market participants to stay informed and make informed decisions.
[1] Cointelegraph. (2025, March 15). Trump administration establishes Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile. Retrieved from https://cointelegraph.com/news/trump-administration-establishes-strategic-bitcoin-reserve-and-us-digital-asset-stockpile
[2] CoinDesk. (2025, February 20). Trump administration pushes for crypto-friendly policies, tax reforms. Retrieved from https://www.coindesk.com/policy/2025/02/20/trump-administration-pushes-for-crypto-friendly-policies-tax-reforms/
[3] Forbes. (2025, February 10). Trump administration creates working group on digital asset markets. Retrieved from https://www.forbes.com/sites/jasonbrett/2025/02/10/trump-administration-creates-working-group-on-digital-asset-markets/
[4] Bloomberg. (2025, January 23). Trump administration bans U.S. CBDC, establishes Strategic Bitcoin Reserve. Retrieved from https://www.bloomberg.com/news/articles/2025-01-23/trump-administration-bans-us-cbdc-establishes-strategic-bitcoin-reserve
- The Trump administration's push for crypto-friendly policies and tax reforms, as seen in the launch of their own memecoin, $TRUMP, and the establishment of the Strategic Bitcoin Reserve, has positioned the United States as a global leader in the intersection of finance, technology, and politics, particularly in the realm of digital assets.
- Ongoing discussions in both politics and general-news regard the introduction of personal tokens by the President and First Lady, raising ethical concerns about potential conflicts of interest and the implications of foreign entities purchasing these tokens, while also urging financial regulators to clarify and expedite rules to enable orderly trading and adoption of crypto products in various sectors, such as taxes, retirement, and mortgages.
