Bitcoin Plunges Over 40% from October 2025 Peak Amid Macroeconomic Headwinds

Bitcoin Experiences Significant Downturn from Record Highs

Bitcoin, the world's leading cryptocurrency, has experienced a substantial decline in value, falling by over 40% from its all-time high recorded in October 2025. After peaking at approximately $126,080 to $126,210.50 on October 6, 2025, the digital asset was trading between $67,000 and $76,574 as of early February 2026. This downturn marks Bitcoin's lowest price level in 15 months, pushing market sentiment into an 'Extreme Fear' zone, a level not seen in 3.5 years. The decline comes despite the re-election of President Donald Trump, who campaigned on promises to establish the United States as a global 'crypto capital'.

Macroeconomic Pressures Fuel Market Correction

Several macroeconomic factors are cited as primary drivers behind Bitcoin's recent depreciation. Analysts point to the Federal Reserve's monetary policy, particularly its reluctance to further ease interest rates despite some reductions in September and October 2025, as a significant influence. Concerns over persistent inflation and the implications of higher interest rates have made non-yielding assets like Bitcoin less attractive to investors. A global shift towards a 'risk-off' sentiment has also been observed, with capital moving out of speculative assets due to a stronger dollar and delayed interest rate cuts. This broader market caution has been exacerbated by a parallel sell-off in technology stocks, partly driven by concerns surrounding artificial intelligence investments. The nomination of Kevin Warsh, an 'inflation hawk,' as the next Federal Reserve chair, has further contributed to market uncertainty, as he is rumored to favor maintaining higher interest rates for an extended period.

Regulatory Landscape and Investor Confidence

Despite President Trump's administration taking steps to foster a crypto-friendly environment, regulatory uncertainty has continued to weigh on investor confidence. Following his re-election, Trump's administration initiated measures such as issuing Executive Orders to advance U.S. leadership in digital assets and rescinding the controversial SAB 121, which had imposed significant burdens on institutions holding crypto assets. The administration also saw the enactment of the GENIUS Act for stablecoin regulation and efforts to align the approaches of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, a reduced enforcement posture by the SEC in fiscal year 2025, while potentially positive, also created a lack of clear rules, particularly for stablecoins and derivatives, contributing to market instability. Earlier in February 2025, Bitcoin also experienced a decline partly attributed to Trump's announcement of new tariffs, sparking economic uncertainty.

Trump's 'Crypto Capital' Vision and Market Reality

President Trump's campaign pledges to make the U.S. 'the crypto capital of the world' were initially met with enthusiasm, contributing to a 'Trump bump' that saw Bitcoin prices soar past $100,000 following his election win in late 2024. His promises included:

• Ending what he termed 'Biden's anti-cryptocurrency policy'
• Supporting U.S.-based Bitcoin mining operations
• Establishing a 'Strategic Bitcoin Reserve' for the government
• Replacing SEC Chair Gary Gensler with Paul Atkins
• Creating a dedicated Crypto Advisory Council
• Protecting the right to self-custody digital assets

While these initiatives aimed to create a more favorable environment for digital assets, the recent market downturn underscores the complex interplay of global economic forces, regulatory developments, and investor sentiment that ultimately dictate cryptocurrency valuations, even amidst strong political backing.