The US is becoming a procrypt, but prices have not responded yet
One of the biggest mystery of the Cryptoasset sector is why, despite the rapid and comprehensive pivots of US policymakers, crypto assets prices have yet to respond in a critical and sustainable way. These actions include, but are not limited to, multiple executive orders related to the crypto sector, including the formation of a strategic Bitcoin reserve. Moreover, the first-ever White House crypto summit brought business leaders and investors from across the crypto sector for the first time, providing direct communication between the industry and government. Furthermore, these policy measures and events have been supported by more bullish stories from business leaders, lawmakers and investors in various economic sectors.
All of these outbreaks allow crypto investors and policy advocates to expect prices and investment funds to be far higher and more aggressive in 2025 than they turned out to be true. So far, prices have fallen sharply since initially exceeding $100,00 after the US election results. Let's take a look at a few reasons.
Less than expected from Bitcoin Reserve
The much-anticipated strategic Bitcoin reserve has become a reality through the current executive order, but the facts disclosed during the EO announcement and follow-up interviews have not impressed some members of the crypto community. The US has established both strategic Bitcoin reserves and stockpiling of non-Bitcoin digital assets, but there are some items worth researching.
First, the bitcoin that forms the SBR does not consist of new Bitcoin purchases carried out by the US government, at least at the time of this writing. Rather, the Bitcoin already held by the government as a result of seizures and other enforcement actions is being converted to form reserves. Second, despite the secretaries of the Ministry of Finance and Commerce considering reasons for budget neutrality to acquire additional Bitcoin, there was no timeline disclosed. Finally, there is no such declaration despite hopes and comments that will begin to bring tax law changes to approach in the days after the announcement of Bitcoin Reserve.
In short, news about SBR was welcomed in the market, but the details were overwhelming for investors.
Bibit Hack rekindled fear
Despite the continued movement of the Cryptoasset sector further into the mainstream, hacking, violations and other unethical actors within the space continue to cause economic and reputational damage to market sentiment. As the shadow of FTX continues to recede and accelerates with the first batch of payments made from the real estate, a new source of fear has come to the forefront. Recently, Crypto Exchange Bybit was hacked by North Korean hacker group Lazarus, resulting in nearly $1.5 billion in cryptographic procedures being stolen. Headline Shock Aside from this event, investors weren't afraid that Crypto organizations are still in the fast, incredible mindset that permeates tech startups.
Asset management companies and other financial institutions continue to develop products and services for almost every tier of the investor market, but the fear of hacking and violations continues to prove a significant headwind to price rises. In particular, since many crypto assets are outside the scope of investor protection and/or insurance contracts, which have become nearly default settings for well-developed financial markets, Tradfi's offering continues to be considered more traditional products and relatively high risk.
While on-chain assets have long been touted as safe assets, it remains difficult to persuade a wider market of this fact, as long as large hacks continue to occur.
Macroeconomic uncertainty
Finally, certainly importantly, the continued and increasing uncertainty of the macroeconomic that continues to permeate the US economy and even the global financial system. The effects were the same, in the form of trade wars, tariffs enacted within days and reversed, or statements restructuring, proximity or otherwise related to the world trade system. Financial markets are going through a period of turbulence, despite market leaders such as Apple pledging to invest hundreds of millions of millions in the future.
In this sense, the CryptoAsset sector is traded like other higher volatile and risk-on assets driven by headlines and sound bits compared to the ongoing adoption of blockchain-based technologies. With the macro image set to remain ambiguous for the time being, investors and policy advocates should prepare to focus on the fundamentals of chain assets adoption and investor profits to mitigate these big picture headwinds.
Crypto is a volatile 2025, but investors are encouraged to monitor headwinds and tailwinds.
