Cryptocurrency prices have collapsed in recent weeks, erasing much of the meteoric rise seen in the months following the election of President Donald Trump.
The price of bitcoin has fallen by almost a third since its recent peak in October, settling at around $86,340 on Monday. Ethereum, the second largest cryptocurrency, has plunged further, falling 40% since last month.
The total value of cryptocurrency — as measured by market capitalization — fell by more than $1 trillion during that period, Jim Reid, research strategist at Deutsche Bank, said in a note to clients on Monday.
Here’s what you need to know about what caused the sell-off and where crypto will go next:
How far have cryptocurrency prices fallen?
The election of Trump, who dubbed himself “the first crypto president,” sparked a surge in the price of digital assets.
Bitcoin rose 40% in a few weeks, surpassing $100,000 for the first time last December. After a decline in the spring, bitcoin reached an all-time high of around $126,270 on October 6.
In recent weeks, the price of Bitcoin has fallen by almost $40,000, or about a third. Nonetheless, the price remains more than 25% higher than its opening level on Election Day last November.
Bitcoin has proven to be very volatile since its launch approximately 15 years ago.
As recently as 2022, bitcoin suffered a downturn that reduced its value by more than 60%. A similar decline occurred in each of the previous two years, when the pandemic helped spark waves of buying and selling.
“We’ve seen a lot of cryptocurrency crashes before,” Hilary Allen, a law professor at American University who studies cryptocurrency policy, told ABC News, pointing to the lack of fundamental value that would otherwise anchor the price.
“With something like cryptography, the air comes out every now and then,” Allen added.
What explains the fall in cryptocurrency prices?
Experts who spoke to ABC News attributed the decline in crypto prices to a broader stock market downturn as well as signs of a potential pause in interest rate cuts from the Federal Reserve.
The market sell-off in recent days has highlighted the uncertainty hovering over the economy, with some investors warning of an AI bubble. As big tech names spend hundreds of billions of dollars to build data centers and develop models for this energy-intensive technology, the financial benefits remain uncertain.
Nvidia, the giant chipmaker behind many of the semiconductors powering AI, has fallen nearly 10% since late October. The tech-heavy Nasdaq fell about 4% during that period.
“Tech stocks and cryptocurrencies tend to be highly correlated when they fall because they are both risky assets and investors treat them similarly in their portfolios,” Bryan Armour, director of passive strategies research at financial firm Morningstar, told ABC News.
Federal Reserve Chairman Jerome Powell answers questions from reporters during a news conference following a meeting of the Federal Open Market Committee at the Federal Reserve, October 29, 2025, in Washington, DC.
Alex Wong/Getty Images
Some crypto investors were hoping to get a boost from further interest rate cuts, but the policy faces growing doubts.
The Fed lowered its benchmark interest rate at each of its two previous meetings, and policymakers had anticipated an additional quarter-point cut in December. But stubborn inflation has prompted some Fed officials to express caution about further rate cuts.
The prospect of lower interest rates typically pushes up asset prices, as the promise of cheaper borrowing represents a potential boon for companies and their investors. But the opposite is also true, analysts say: As hopes of a rate cut fade, assets could fall.
Asked about the role of Fed policy in the recent cryptocurrency sell-off, Armor said: “It’s another tile in the mosaic. »
What’s next for crypto?
The volatility of crypto makes it almost impossible to predict where the price will go next, experts said, adding that the only certainty might be greater volatility.
The rise of bitcoin ETFs — exchange-traded funds — has pushed crypto deeper into traditional finance over the past year, as these investment vehicles have allowed clients of large brokerages to invest in crypto without owning the underlying asset.
Despite a larger group of investors, digital asset prices have continued to fluctuate. In November, about $4.7 billion was withdrawn from crypto-related ETFs, Armor said, but he noted that some ETFs linked to smaller coins like Solana and XRP saw investments increase.
“I don’t think it’s possible to know where the price will go from here,” Armor said.
