Crypto Market Crashes: Trump Token Leads Declines with 20% Drop

Bitcoin saw a decline on Tuesday, 21st January 2025, as the bullish sentiment in the cryptocurrency market went down with Trump returning to Presidency. Before resuming his office as the new President, Trump announced the formation of a Bitcoin reserve that surged the price of the crypto coin to $106,000.

According to CoinGecko data, the Trump crypto coin launched last week represents the new U.S. President, dropped by 26% in 24 hours, While, the meme crypto coin launched on Sunday, 19th January 2025 by Melanie Trump dropped by 54% in one day.

As per CNBC, Bitcoin dropped by 4% to $103,550 while Ether and XRP went down by 2% and 6%, respectively. Investors of Crypto market celebrated the election of Trump as the President as he promised the introduction of Crypto friendly policies which will include regulatory framework and a federal bitcoin hoard.

Crypto Market Sees Sharp Declines

The constant change in Investor sentiment and interests are creating rapid price changes within the cryptocurrency market. Bitcoin’s price drop killed the positive market trends, it had built earlier in the year disrupting other digital currencies. Research analysts point to both profit withdrawals by investors and new regulations for crypto market crash. In December 2024 as well, Bitcoin prices dropped owing to the market volatility.

Major cryptocurrencies Ethereum and others experienced similar market declines alongside Bitcoin. Traders recalculate their investment strategies as they face potential risk by selling parts of their cryptocurrency portfolio. Financial market participants now question if the downturn will end rapidly or extend its negative trend. Market sentiment is greatly affected by the ongoing regulatory uncertainty that exists primarily in the United States.

Trump Meme Coin Faces Heavy Sell-Off

The politically themed Trump meme coin faced an even sharper decline than Bitcoin dropping by 20% of its value within 24 hours. Kenneth Lamont, a principal at Morningstar also warned the investors and asked them to not invest in crypto without being properly informed. He said, “If Donald Trump delivers on his election promises, we could see cryptocurrency markets continue to surge. However, investors would do well to resist the siren call of fear of missing out, and sit on their hands.”

The Trump token price drop has raised concerns among retail investors who had previously viewed the coin as a high-risk, high-reward opportunity. Unlike established cryptocurrencies like Bitcoin and Ethereum, Trump-themed digital assets tend to rely more on media hype and political events, making them more vulnerable to market fluctuations.

For the retail investors, Lamont said, “Fear of missing out is not an investment strategy. For many investors, the lure of easy wealth is strong, tend to be poor at market timing, buying and selling at the worst moments.”

Melania Coin and Other Political Tokens Also Struggle

Trump digital coin and other related tokens experienced substantial losses together. Both Melania Coin and other altcoins showed strong price decreases during this period. The latest price declines prove that investing in assets that only gain value from marketing and public excitement creates risky financial situations.

The market interest in political-themed cryptocurrencies rises when well-known figures back them although their continued existence remains questionable. Financial investment tokens differ from standard digital property because their value depends more on hype than practical uses or utility.

With the crypto market crash wiping out recent gains, investors are still being cautious about short-term price action. Analysts believe that whether or not Bitcoin can hold minimum levels will determine the direction of the broader market. Meanwhile, the fate of Trump Crypto Coin and similar assets will depend on whether speculative interest revives or continues to fade.