The crypto market faces a new turning point in 2025: the intertwining of Trump's presidency and economic uncertainty

In January and February 2025, as Trump returned to power for a full month, the benefits of U.S. policies began to emerge. However, significant breakthroughs in the AI field also impacted the U.S. stock market during this period, triggering a series of financial turmoil. February was particularly critical, as the interplay of three forces—the release of economic data, adjustments to regulatory frameworks, and the acceleration of technological innovation—led to severe fluctuations and a reshaping of the crypto market.

In February 2025, the economic situation in the United States underwent several changes. A series of key economic indicators declined, coupled with the increase in import tariffs implemented by the Trump administration. These two factors interacted with each other, having a profound impact on the U.S. and even the global economy, triggering fluctuations in global markets.

Despite the revised U.S. fourth quarter GDP growth rate remaining at 2.3%, several indicators show that economic growth has slowed. Non-farm employment increased by 187,000 in February, below expectations; hourly wage growth fell to 0.2%, the lowest in recent times; the University of Michigan Consumer Confidence Index has declined for three consecutive months to 98.3, reflecting growing concerns among residents about declining purchasing power.

In terms of inflation, the core CPI in January increased by 2.5% year-on-year, slightly down from the previous month. The year-on-year price index for core personal consumption expenditures ( PCE ) in January was 2.6%, reaching a recent low and in line with market expectations. However, tariff policies may become the biggest variable affecting inflation. The government announced a 10% tariff on imported goods from Mexico and Canada, which may drive up costs for important categories such as automobiles and agricultural products, and is expected to raise the CPI by an additional 0.3-0.5 percentage points in the second quarter.

In terms of interest rate policy, the market generally expects the Federal Reserve to keep interest rates unchanged in the near term. However, considering the uncertainty of inflation and the pressure that tariff policies may bring, the Fed's decision on interest rate cuts still remains uncertain.

The core contradiction facing the US economy in 2025 is the tug-of-war between slowing growth and resilient inflation. The Federal Reserve is attempting to balance risks through prudent monetary policy, while Trump's tariff policies have complicated the issue, continuously impacting the pricing logic of global supply chains and exacerbating global economic volatility. Seeking certainty in this policy game will be the central theme of the global market in the next six months.

Major breakthroughs in the AI field have had a significant impact on the market. A certain AI company has greatly reduced computing power dependency through algorithm optimization, pushing the industry from "computing power competition" to "algorithm efficiency" transformation, reshaping the market's demand logic for AI infrastructure. This breakthrough, combined with global supply chain concerns triggered by tariff policies, has led to a heavy blow to tech stocks. In February, the Nasdaq fell sharply by 4%, marking its worst monthly performance in recent times; the Dow Jones dropped by 1.58%, and the S&P 500 declined by 1.42%.

The market is beginning to reassess the competitive landscape of the American AI industry. The latest financial reports from large tech companies show no particular highlights, and the stock price performance is characterized by "end-of-month policies and emotions dominating the plunge." In the context of a depressed market sentiment, crypto assets have also not escaped unscathed. The correlation between Bitcoin and the Nasdaq has risen to 0.5, reaching a recent high, indicating that the crypto market is increasingly affected by stock market fluctuations.

The new U.S. government's encryption policy has shifted from campaign promises to substantive actions. The government announced the issuance of an official token, reaching a market value of over $14.5 billion at one point, but then plummeted by 60%. This event demonstrates the potential of crypto assets as a new type of political tool, highlighting the importance of "code is power."

The government has also formed a cryptocurrency task force to explore the establishment of a national cryptocurrency reserve and has relaxed regulations on digital asset custody. These positive developments drove the price of Bitcoin up by 9.5% at the end of January. However, in February, the market experienced a severe correction, with Bitcoin falling below $100,000 and a monthly decline of 17.39%. This sharp decline is the result of multiple factors, influenced by tariff policies and reflecting the market's self-adjustment after excessive leverage.

It is noteworthy that Bitcoin has shown some resilience amidst the fluctuations. Some institutions view this volatility as a long-term allocation opportunity, as a certain company invested $1.99 billion to purchase Bitcoin at an average price of $97,514 per coin.

In the long term, the price trends of gold and Bitcoin are increasingly converging, highlighting Bitcoin's "digital gold" attribute more clearly. Both are seen as alternatives to fiat currency and may continue to maintain a certain degree of correlation in the future.

The current crypto market is in a vacuum of news, and traditional narrative effects are weakening. However, three major trends are reshaping the market: a transformation in regulatory paradigms, a shift from speculation-driven to technology-driven markets, and the integration of AI and encryption as a new breakthrough. As the market completes the clearing of leverage and new narratives take shape, a new upward breakout may be imminent.

Trump has been in office for a month, and the market has entered a complex chaotic period. Despite frequent short-term fluctuations, Bitcoin's scarcity attribute remains strong, giving it the vitality to traverse cycles. As a classic work states: "Chaos is not a pit, but a ladder." In this time full of uncertainty, market participants need to stay vigilant while also recognizing new opportunities.