Trump Creating Chaos in the Cryptocurrency Market?…Advice for Web3 - Daily Hodl

# Trump's Reelection Sparks Volatility in Cryptocurrency Market By Jeong-Hwa Lee, Block Media Donald Trump's reelection as U.S. President has introduced significant shifts in cryptocurrency policies, igniting explosive movements in the market. The Trump administration has declared pro-crypto strategies such as strategic Bitcoin reserves and relaxed regulations from the Securities and Exchange Commission (SEC). However, contrary to initial expectations, the Web 3.0 industry has been mired in high volatility and capital outflows, according to a report by Daily Hodl on the 15th. # Unmet Expectations Fuel Market Downturn Despite anticipations that the Republicans' pro-crypto stance would spur market growth, the cryptocurrency market has trended downward. Analysts suggest the primary reason is that the 'best-case scenario' had already been priced in. The U.S. government's anticipation of massive Bitcoin purchases ended merely as verbal promises without execution, prompting investors to quickly sell off Bitcoin to realize gains. Consequently, the traditional market adage, ‘buy the rumor, sell the news,’ led to a loss of strong growth momentum and triggered selling pressure. # Institutional Profit-Taking and Macroeconomic Impact From February 2025, major institutions began to sell off Bitcoin and Ethereum futures, realizing profits from their peaks in late 2024. March saw an intensification of this selling pressure, leading to a backwardation where futures prices dropped below spot prices, signaling reduced capital inflows. Trump's macroeconomic strategies also contributed to the chaos. The administration’s trade conflicts, imposing tariffs of 25% on Mexican imports and 50% on Canadian imports, led to a drop in Treasury yields and a reduction in the S&P 500 index to its lowest point since the election. Cryptocurrencies, classified as risk assets, also faced pressure. News of the Bybit exchange hack further exacerbated market unease. # Web 3.0 Projects Face Liquidity Crisis During the first week of March, significant capital outflows hit the entire cryptocurrency market and the DeFi (Decentralized Finance) ecosystem. Investors withdrew $2.6 billion from U.S. Bitcoin ETFs in the last week of February, the largest outflow since the inception of the ETFs. The total market capitalization of cryptocurrencies slumped from $3.7 trillion in December 2024 to approximately $3.1 trillion by the end of February 2025. Notably, the total value locked (TVL) in DeFi protocols decreased by about $45 billion during the winter, falling to $92.6 billion in early March, returning to levels seen in early November 2024. This structural change resulted in significant losses for major hedge funds and arbitrage traders. # Advice for Web 3.0 Founders Daily Hodl advised that, given the current market conditions, Web 3.0 founders should plan for both stabilization and growth phases. During the stabilization phase, the focus should be on resource preservation, team retention, product improvement, and existing user satisfaction. Emphasis should be on enhancing user experience and delivering promised features, avoiding speculative actions or risky financial management. As the market begins to recover, a competitive expansion strategy should be prepared for the growth phase. DeFi protocol operators should consider liquidity mining programs or establish partnerships with wallets to increase market share. For infrastructure projects, collaboration with enterprises to integrate blockchain solutions should be planned as regulatory clarity emerges. # Opportunities Amid Tightening Unlike past downturns, the current market adjustment stems from the changing structural dynamics involving institutional investors, ETFs, and arbitrage activities. Cryptocurrencies now display new forms of volatility, responding sensitively to moves by major institutions and the government. Although the pro-crypto policies of the Trump administration did not immediately lead to an increase in liquidity, political support from the highest levels of the U.S. government provides a foundation for long-term growth in the Web 3.0 industry. Daily Hodl reported, "While challenging times are anticipated, projects that navigate the current storm well are expected to take on a leading role in the next bull market."