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Donald Trump’s election turned out to be a buy-the-rumor, sell-the-news situation for the cryptocurrency industry.
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After softness in 2025, can Bitcoin bounce back in 2026?
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10 stocks we like better than Bitcoin ›
On paper, 2025 should have been a banger year for Bitcoin (CRYPTO: BTC). Over the last 12 months, the Trump administration has supported the crypto industry with legislation and regulatory changes designed to help it break into the mainstream. Meanwhile, falling interest rates and uncertainty about the U.S. dollar create a favorable macroeconomic environment for alternative stores of value like Bitcoin. Let’s dig deeper to see what the next year might have in store.
In financial markets, good news doesn’t always mean good results. That’s because asset prices usually rise in anticipation of favorable future events — only for the hype to blow off when these events happen as investors take profits and move on to new opportunities. Bitcoin’s 6% decline in 2025 is a natural correction after the 125% rally it experienced in 2024.
Bitcoin’s 2024 rally likely priced in many of the positive impacts of the Trump administration. These include the Securities and Exchange Commission (SEC) shifting its stance away from lawsuits and fines toward regulatory clarity. The new administration has also created a Bitcoin strategic reserve which helps legitimize the asset as a store of value, making it more palatable to risk-averse institutional investors like insurance companies, pension funds, and university endowments.
While almost 90% of Bitcoin is owned by regular retail investors, institutional ownership will be key to its sustainable success. These large organizations typically have deep pockets and long investment horizons, so their presence in the Bitcoin market will help smooth out volatility.
The dollar index, which tracks the value of the U.S. currency compared to a basket of rival currencies, fell about 9% in 2025. This decline negates much of the S&P 500‘s return of 17% over the same time frame for foreign investors. The dollar is losing value because of increasingly erratic trade policy, concerns about central bank independence, and perhaps even falling interest rates, which can make American fixed-income assets less attractive compared to the alternatives in other countries.
As a cryptocurrency, Bitcoin operates independently of individual national economies, making it an excellent way for U.S. investors to hedge currency risk in their portfolios. The asset’s early-mover advantage and brand recognition have given it a reputation as “digital gold,” helping it stand out from the hundreds of other digital assets that can fill a similar role.
