Cryptocurrency Market Navigates Turbulent 2025 Amid Regulatory Shifts and Price Volatility

The cryptocurrency sector entered 2025 with considerable optimism following Donald Trump’s electoral victory and his pledge to establish the United States as “the crypto capital of the planet”. The president launched two meme coins, $TRUMP and $MELANIA, which achieved a combined valuation of $12 billion within days of frenzied trading. Trump appointed Paul Atkins, a regulator perceived as sympathetic to digital assets, to chair the Securities and Exchange Commission, whilst David Sacks, a former PayPal executive, assumed the role of White House “crypto czar”. The administration’s proposal to incorporate cryptocurrencies into national strategic reserves signalled an apparent watershed moment for the industry’s mainstream acceptance.

However, the subsequent eleven months delivered a markedly different outcome. Bitcoin, the dominant cryptocurrency by market capitalisation, experienced substantial volatility throughout the year. The token surpassed $100,000 for the first time, subsequently declined, rallied once more, then retreated to $87,500 by late December, representing a 6.4 per cent decline from January levels. Alternative tokens encountered steeper losses. Ethereum fell 51.1 per cent, whilst Solana declined 34.9 per cent. Cardano dropped 57.8 per cent, and Dogecoin, the meme token previously endorsed by Elon Musk, plummeted 61 per cent.

These price movements contradicted forecasts from leading financial institutions at the year’s outset. Standard Chartered, Bernstein, VanEck and Fundstrat projected bitcoin valuations ranging from $120,000 to $250,000, citing growing legitimacy and the token’s appeal as digital gold. The market’s failure to meet these expectations underscores persistent challenges in cryptocurrency valuation and adoption.

Regulatory developments provided a contrasting narrative of progress. The United States enacted the Genius Act in July, establishing the first comprehensive regulatory framework for stablecoins. Britain unveiled legislation in December designed to position the nation as a global leader in digital asset adoption through full regulatory oversight. The Bank of England moderated its previously cautious stance, with Deputy Governor Sarah Breeden referencing preparations for a “multi-moneyverse” encompassing diverse monetary forms that could reduce payment and transfer costs. In November, the central bank proposed a regulatory regime addressing stablecoins and tokenised banking.

The cryptocurrency landscape encompasses considerable diversity, ranging from speculative meme coins without intrinsic value to stablecoins purportedly backed by traditional assets on a dollar-for-dollar basis. Distributed ledger technology, the foundational infrastructure enabling secure and transparent asset exchange, demonstrates applications extending well beyond bitcoin. This technological versatility continues to attract institutional interest despite market turbulence.

Security breaches and fraudulent activities continued to plague the sector throughout 2025. In February, Argentinian President Javier Milei faced scandal after promoting libra, an obscure digital token, to his 3.8 million social media followers. The token surged from near zero to $5 within hours before collapsing to $1, prompting fraud claims and a judicial inquiry. The cryptocurrency exchange Bybit reported in May that hackers had stolen $1.5 billion of digital tokens from a supposedly secure cold wallet, marking one of the largest thefts in cryptocurrency history.

Legal proceedings against cryptocurrency fraudsters intensified during the year. Zhimin Qian, a Chinese national convicted in London during September, received an 11-year and eight-month sentence for money laundering offences involving more than £5 billion worth of bitcoin. The cryptocurrency had been seized from devices discovered at a Hampstead mansion in 2018, linked to a Ponzi scheme affecting 128,000 victims. In the United States, Do Kwon, co-founder of Terraform Labs, received a 15-year sentence in December for orchestrating what prosecutors described as “fraud on an epic, generational scale”. The collapse of his TerraUSD and Luna tokens in 2022 inflicted estimated losses of $40 billion on investors who believed the stablecoins were securely backed by US dollars.

Corporate treasury strategies involving cryptocurrency purchases gained popularity in early 2025, with companies deploying spare cash and borrowed funds to acquire digital tokens rather than traditional money market instruments. This approach generated substantial returns during periods of cryptocurrency appreciation but proved catastrophic when values declined. Microstrategy, rebranded as Strategy, exemplifies this trend. The Nasdaq-listed software company’s shares, which surged in 2024 and early 2025, declined by two-thirds from their July peak. Mining company equities suffered similar losses.

Retail participation in cryptocurrency markets appears to be waning, at least within the United Kingdom. The Financial Conduct Authority reported that 8 per cent of UK adults owned cryptocurrency in 2025, down from 12 per cent in 2024. This declining engagement suggests growing caution among individual investors following repeated market downturns and high-profile scandals.

Looking towards 2026, several factors may influence cryptocurrency valuations. Further interest rate reductions could benefit digital currencies, which generate no yield and therefore become more attractive in low-rate environments. Digital tokens have increasingly tracked movements in artificial intelligence stocks, suggesting they are perceived as risk-on assets appealing to investors seeking higher returns. The Digital Asset Market Clarity Bill, scheduled for Senate examination in January, may facilitate new cryptocurrency products by clarifying regulatory responsibilities between the SEC and Commodity Futures Trading Commission.

Kevin Hassett, a White House adviser and bookmakers’ favourite to succeed as Federal Reserve chairman, disclosed ownership of at least $1 million in Coinbase stock and received a $50,001 salary from the exchange’s academic and regulatory advisory council. His appointment could reinvigorate confidence in digital tokens. However, concerns persist regarding cryptocurrency’s role in facilitating corruption. Will Thomas, a professor at the Michigan Ross School of Business, has argued that cryptocurrency’s rise is transforming America into “a kleptocracy”.

Market sentiment remains divided. The cryptocurrency sector maintains a long-term bullish outlook, its prosperity depending fundamentally on sustained price appreciation. Mike McGlone, commodities strategist at Bloomberg Intelligence, presents a contrarian view, suggesting bitcoin could crash “back toward $10,000” in 2026. He posits that the market may have already reached “peak bitcoin”, drawing parallels with the 1929 Wall Street crash when share prices fell 90 per cent.

The presidential meme coins issued by Trump and his wife have declined precipitously, falling 86 per cent and 99 per cent respectively since inauguration day, according to the Wall Street Journal. Most purchasers sustained heavy losses, whilst the president’s personal gains from their brief popularity remain undisclosed. This outcome encapsulates the volatility and speculative nature that continue to characterise the cryptocurrency market, despite efforts towards regulatory normalisation and institutional acceptance.