Impact of Trump's policies and Federal Reserve decisions on the crypto market

Bitcoin enjoyed a significant run in price; the world’s leading cryptocurrency started 2024 near the $42,000 mark, reaching highs of $108,000 in mid-December before closing the year near $94,000 – an impressive run compared to some investment vehicles, and no surprise, it wasn’t a smooth ride.

Bitcoin volatility in 2024, especially in the second half of the year, was fueled by multiple events. These started with President Trump’s Bitcoin-positive post on Truth Social on June 11th, 2024, and ended with the most recent news about a possible Crypto Strategic reserve.

The US president has spoken favorably on Bitcoin multiple times, leading to increased expectations for a wave of pro-crypto regulation if elected. On Truth Social, the president said, “I will make sure the U.S. is the Crypto Capital of the world.”

In mid-2024, multiple events occurred that had a limited impact on the Bitcoin price, such as the House passing a bill barring the Federal Reserve from issuing digital dollars, Trump’s crypto-friendly Truth Social Post in June, and the Bitcoin 2024 convention in Nashville on Saturday, July 27th, 2024.

At first, all these events had a minimal impact on Bitcoin's strength. However, as the year progressed, Bitcoin's value began to gather steam in early September when the Federal Reserve cut interest rates by 50 basis points on September 18th, 2024. This was followed by the crypto pre-election rally, which resumed its momentum after the elections, resulting in Bitcoin prices reaching an all-time high of $108,000.

In January 2025, President Trump issued an executive order, which directed the formation of a group to develop more friendly cryptocurrency regulations and investigate establishing a national crypto reserve, fulfilling his pledge to change US crypto policy rapidly. Although the news initially seemed optimistic for cryptos, Bitcoin's price dropped from its peak of $108,000 to $84,000 in March 2025. Whether the price decline was a traditional correction or a result of traders reacting negatively to the executive order, as it could open the door for more regulations, is yet to be known.

On March 2nd, 2025, the US President announced via a Truth Social post that the working group would “move forward” on facilitating the strategic federal purchases of Bitcoin, Ethereum, XRP, Solana, and ADA (Cardano). The announcement came ahead of the White House hosting its first cryptocurrency summit on March 7th, 2025, to which a wide range of crypto industry leaders, top administration officials, and lawmakers were invited.

Some investors and economists voiced their concerns about a strategic crypto reserve, highlighting the risky nature of cryptocurrencies and whether taxpayer money will be used to invest in a high-risk asset. However, Trump said, “We don’t want any cost to taxpayers.” A Crypto Strategic Reserve is likely to require congressional approval, which may not be easy due to possible crypto skepticism.

It wasn’t just Bitcoin that enjoyed a good run in 2024 and early 2025. Other cryptocurrencies also experienced significant upside moves, especially those President Trump mentioned in the strategic reserve talks. However, as marked on the above charts, these moves occurred at different percentages.

From January 1st to December 31st 2024, Ripple rose by 306.00%, Solana by 87.83%, Ethereum by 49.63%, and ADA (Cardano) rose by 43.15%. However, some of the moves didn’t last in the first quarter of 2025 – Ethereum (ETH/USD) fell back down, losing all its 2024 gains and another 17.64% on top of it, Solana (SOL/USD) and ADA (Cardano - ADA/USD) erased half of what they made in 2024 while Ripple (XRP/USD) was able to hold on to all its gains so far.

Not everyone may agree on this, but it makes sense, crypto markets correlate with macroeconomics and changes to interest rates impact Bitcoin. A high interest rate environment with declining inflation provides good returns to investors, which may result in lesser investments in risky assets such as Cryptocurrencies.

The above chart is divided into two parts. The upper part is a weekly chart of BTC/USD divided into four phases:

Phase 1: The Federal Reserve raises rates for the first time in March 2022.

Phase 2: The FED Pivot (Pause), interest rates remain unchanged as markets wait for the first cut.

Phase 3: The FED cuts interest rates for the first time since 2020 by 50 basis points on September 18th, 2024. The same phase also highlights the period when market expectations for 2025 included 3 - 4 interest rate cuts of 25 basis points each, making a total of 0.75% - 1.0% cuts in 2025

Phase 4: The expectations for 2025 cuts drop to only two 25 basis points cuts.

The lower part of the chart shows US Interest Rates, highlighting the Fed’s first hike and pivot. Arrow A represents the first interest rate cut and market expectations of 3 - 4 x 25 bps cuts before December 2024, while Arrow B represents the period when interest rate cuts expectations dropped to only 2 x 25 bps cuts for 2025.

A review of the latest commitment of traders report released on Friday, March 14th 2025, including data up to Tuesday, March 11th, 2025 shows the following:

Open interest in Bitcoin futures has steadily increased since the instrument’s inception. Although the rise was slow, it has registered higher numbers regularly. This month, open interest registered a 12% decline compared to last month, approximately down from 29000 to 25500. The declining open interest was accompanied by a decrease in price, which may be concerning if it resumes its decline next month.

As displayed on the above chart, Bitcoin volume data released by the Commodity Futures Trading Commission (CFTC) for Bitcoin futures reflects a rising volume trend alongside a declining price and a declining volume trend with an increasing price. (marked by blue lines)

The volume data also shows higher volume bars in line with red candles, a few examples are numbered 1 - 4 on the chart.

• Following the US elections, Bitcoin price gapped up from $76,000 to $80,000, which turned into a technical support level following the break (Gap 1).
• Purple arcs marked a complete double top formation, and price action broke below the chart pattern base line (purple line). As detailed below, the break formed a downward gap, taking the price down to a confluence of support. Price action attempted multiple pullbacks; however, none have worked so far.

A confluence of support represented by the annual pivot point of $80210.3, and the range defined by Gap 1

Two critical resistance levels lie above price action, the broken baseline resistance as marked by circle A and the declining trend line marked on the chart by circle B.