Since its peak last fall, Bitcoin, the world’s largest cryptocurrency, has lost almost half its value. Nearly $2 trillion of wealth has evaporated from the global crypto market since October.
That raises an obvious question: what took so long? Outside crimes and scams, critics argue, the technology has little real-world utility and its economics are fragile.
For months, crypto prices were buoyed by euphoria following the industry’s extraordinary support within Trump administration. Industry backers who spent millions supporting Trump’s return to power appeared to gain major concessions: an investor elevated to a White House advisory role, one category of cryptocurrency receiving federal recognition, weakened regulatory scrutiny and invitations to White House events.
Yet rather than cement legitimacy, the administration’s actions have, critics say, exposed the fundamental weaknesses of many crypto assets. As investors have grown wary of riskier assets, Bitcoin’s value has fallen sharply since October, slipping below $70,000 and reinforcing the view that crypto had long avoided sustained scrutiny.
When we entered the White House in 2021, crypto lobbying was expanding faster than any industry we had seen. Firms sought to shape regulations and enter mainstream finance, hiring lobbyists to draft laws that would grant volatile digital currencies government backing. Major investors believed such steps could elevate crypto’s systemic importance — potentially ensuring support in the event of a crash.
One of the industry’s prominent allies, Senator Cynthia Lummis, known as the “Crypto Queen,” received more than $50,000 in campaign contributions from crypto interests weeks before sponsoring a pro-crypto bill.
Initially, we kept an open mind about crypto’s potential. Between 2021 and 2022, we attended dozens of meetings where firms and their supporters argued that blockchain technology would expand financial inclusion and even replace parts of the internet.
Independent experts, however, were sceptical. If the technology was truly transformative, why were major technology companies not adopting it widely? The answer, we increasingly heard, was that blockchain often functioned as a slow and expensive database rather than a revolutionary platform.
As economists with the Council of Economic Advisers, we raised these concerns in the 2023 Economic Report of the President. Crypto, we argued, is at best a form of private money — something with a long history of financial instability. At worst, it is a speculative and volatile asset with limited practical use whose proponents aim to weave it into the financial system, potentially leaving taxpayers exposed in a crash.
Events reinforced those worries. The collapse of the major crypto exchange FTX, tied to fraudulent activity by founder Sam Bankman-Fried, prompted the administration of Joe Biden to adopt a more cautious regulatory stance. Several other crypto firms also failed during that period, triggering a large sell-off.
This downturn, often called “crypto winter,” might have led to a deeper reassessment of the technology’s value. Instead, the industry concluded that it needed greater influence over financial rules — and more political power. In 2024, crypto interests spent more than $100 million backing pro-crypto candidates, including Trump.
After taking office again, Trump quickly moved to support the industry. His administration advanced legislation bringing stablecoins within the regulatory perimeter of the banking system. With investor David Sacks serving as an artificial intelligence and crypto adviser, officials also endorsed measures aimed at expanding adoption. Meanwhile, Lummis and Senator Bernie Moreno have promoted the creation of a government reserve designed in part to support Bitcoin’s value.
The administration is also pushing legislation known as the Clarity Act. Critics say it would grant regulatory approval to more cryptocurrencies while allowing smaller tokens to be marketed to ordinary investors with fewer protections — a potential recipe for financial harm.
Initially, these moves drove crypto prices higher, with Bitcoin rising about 20% in the 10 months following Trump’s 2025 inauguration. But even that combination of political backing and rising valuations did little to expand adoption. Trump and his family have reportedly earned about $1.4 billion from various crypto ventures, leading some observers, including economist Paul Krugman, to argue that the industry may have aligned itself with the wrong champion.
Nearly two decades after Bitcoin’s debut, the technology’s most consistent use remains cross-border transfers and, critics say, illicit activity. No one can say with certainty what crypto will be worth in the future. But with the most crypto-friendly administration yet in power, the industry’s advocates have fewer explanations left if adoption continues to stall.
The New York Times