Trump effect on bitcoin so far similar to 2016 win

This is a segment from the Empire newsletter. To read full editions, subscribe.

We’re totally doomed.

Doomed to forever suffer the psychology of big numbers — the more bitcoin goes up by raw dollar value, the further it falls when it corrects. Which can look much scarier than it really is.

Bitcoin has shed as much as $18,000 since its all-time high on Jan. 20, set hours before Trump’s second inauguration — a 16.5% drop in two weeks — sending the rest of crypto spiraling as it always does.

The hopium is that this isn’t even the worst correction of 2025 so far. What is currently a 12% retracement in the past week at worst is still better than the 13% lost in the second week of January.

Bitcoin also in a week fell from nearly $108,300 to under $92,500 in the middle of December — nearly 15%.

You can see it on the chart above. The blue columns show bitcoin’s weekly price performance on a rolling basis, and the orange line points to the total size of bitcoin’s current pullback as of this morning.

Drawdowns like these happen regularly. The real trick is knowing when bitcoin won’t bounce back, putting an end to the bull market.

More hopium: Historically, the ends of bull markets have been marked by much larger short-term corrections ranging around 20% to over 40%.

Still, as far as performance during the US election is concerned, bitcoin is holding up. It’s so far tracking how it did as Trump prepared to take office the first time, in 2016.

Bitcoin, starting 30 days before Election Day until today, has gained about 53%. It had otherwise rallied 66% by around this time following Trump’s 2016 win.

Both are well below the returns bitcoin posted around Biden 2020, although that was during the pandemic helicopter money era so it’s not really a fair comparison.

Everything that isn’t bitcoin is where it hurts most. ETH has slipped as much as 34% in the past week — from over $3,200 to $2,124 earlier this morning before climbing back to nearly $2,600. That’s good for a 20% bounce.

Practically all other altcoins are undergoing something similar. Many are seeing their worst corrections since August, which was a tough month for both crypto and the stock market after Powell signaled rate cuts were coming.

All that was quickly shrugged off and here we are, five months later and about 75% higher.

Just don’t tell that to the nearly $1.9 billion in leveraged longs that have been reported wiped in the past 24 hours, the most since December. Bybit CEO Ben Zhou reckons the total number could be as high as $10 billion.

Source