Crypto market experiences turbulent start to the new year

For crypto investors, the start of the year is anything but joyful, as digital assets are noticeably retreating from their peak levels. A development characterized by stronger fluctuations can be observed with Bitcoin, which fell by 5% to approximately $97,000 on Tuesday. Simultaneously, crypto exchanges closed futures contracts worth $205 million within just one hour to limit the damage. Within the last 24 hours, the entire crypto market lost 6% of its market capitalization, with Bitcoin acting as the driving force behind the losses following a previous high due to the November elections. Omid Malekan, a business professor at Columbia University, explained to Fortune that the recent price decline suggests that much of the euphoria created by the victory of the crypto-friendly President Donald Trump is gradually fading. Investors are now searching for a new catalyst that could reinvigorate the market. "The positive news from the election is mostly priced in," said Malekan. "Trump takes office in a few weeks. The question arises as to when the theory will become practice and what concrete measures he will actually implement." Trump, once known as a crypto-skeptic, made a remarkable turnaround during the 2024 election cycle by campaigning with promises to establish a national Bitcoin reserve, appoint crypto advocates to government positions, and support crypto-friendly regulation. Some of these promises, including the appointment of an AI and crypto czar, have already been fulfilled. However, it remains open to what extent Trump will continue to pursue his crypto strategy after taking office. Malekan emphasizes that the filling of key positions at the SEC and CFTC with Republican representatives suggests increased crypto-friendliness compared to the previous administration. "Now the question is, what exactly will the different rules involve and how much will they truly accommodate crypto concerns." The current market weakness follows a massive upward movement triggered by Trump's re-election and the Federal Reserve's interest rate cuts. These drove Bitcoin past $100,000 for the first time and to a record high of $108,000 on December 17. Since then, the market has pulled back, with Bitcoin falling to as low as $92,000 in December before a partial recovery began. "The markets look ahead," Malekan explains. "What happens if not all wishes are fulfilled?