What you need to know about cryptocurrency sales

2:53 This illustration, taken on November 22, 2025, shows gold-plated commemorative Bitcoin coins. Justin Tallis/AFP via Getty Images

Cryptocurrency prices have plummeted in recent weeks, erasing much of the meteoric rise seen in the months since President Donald Trump’s election.

The price of bitcoin has fallen by nearly a third since its recent peak in October, registering around $86,340 on Monday. Ethereum, the second largest cryptocurrency, has fallen even further, falling 40% since last month.

The total value of cryptocurrency, measured by market capitalization, has fallen by more than $1 trillion over the period, Jim Reid, a research strategist at Deutsche Bank, said in a note to clients on Monday.

Here’s what you need to know about what’s driving the selloff and where the cryptocurrency is headed next:

How far have the prices of fallen cryptocurrency changed?

The election of Trump, who called himself the “first crypto-president”, caused a surge in the prices of digital assets.

Bitcoin has surged 40% in a matter of weeks, surpassing $100,000 for the first time last December. After falling in the spring on October 6, Bitcoin rose to an all-time high of around $126,270.

In recent weeks, the price of Bitcoin has fallen by almost $40,000, or about one-third. Still, the price remains more than 25% higher than when it opened on Election Day last November.

Bitcoin has proven to be very volatile since its launch about 15 years ago. ago.

As recently as 2022, Bitcoin experienced a crash that reduced its value by more than 60%. A similar decline occurred in each of the previous two years, when the pandemic helped trigger a wave of buying and selling.

“We’ve seen a lot of cryptocurrency crashes before,” Hilary Allen, an American University law professor who studies cryptocurrency policy, told ABC News, pointing to the lack of fundamental value that would otherwise anchor the price.

What causes cryptocurrency prices to fall?

Experts who spoke to ABC News attributed the fall in cryptocurrency prices to a larger retreat in the stock market, as well as signs of a potential pause in interest rate cuts by the Federal Reserve.

The market sell-off in recent days underscored the uncertainty hanging over the economy as some investors warned of an AI bubble. As major technology companies spend hundreds of billions of dollars building data centers and developing models for energy-intensive technologies, the financial benefits remain uncertain.

Nvidia, the giant chipmaker behind many of the semiconductors powering AI, has fallen nearly 10% since late October. The Nasdaq technology index 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 equally in their activities. portfolio,” Brian Armor, 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 on October 29, 2025 in Washington, DC. Alex Wong/Getty Images

Some crypto investors were hoping for a boost from further interest rate cuts, but that policy is facing growing doubts.

The Fed has cut its benchmark interest rate at each of its previous two meetings, and policymakers had forecast an additional quarter-point cut in December. But persistent inflation has prompted some Fed officials to express caution about further rate cuts.

The prospect of lower interest rates usually boosts asset prices because the promise of cheaper borrowing represents a potential benefit. for firms and their investors. But the opposite is also true, analysts say: when hope for a rate cut fades, assets can fall.

When asked about the role of Fed policy in the recent cryptocurrency selloff, Armor said, “It’s another tile in the puzzle.”

What’s next for cryptocurrency?

The volatility of cryptocurrencies makes it nearly impossible to predict where the price will go next, experts say, adding that the only certainty may be greater volatility.

The rise of bitcoin ETFs — exchange-traded funds — over the past year has brought the cryptocurrency deeper into traditional finance, as such investment vehicles have allowed clients of major brokerages to invest in the cryptocurrency without holding the underlying asset.

Despite a wider pool of investors, the price of digital assets continued to fluctuate. Roughly $4.7 billion flowed out of crypto-linked ETFs in November, according to Armor, but he noted that investments in some ETFs linked to smaller coins, such as Solana and XRP, increased.

“I don’t think there’s any way to know where the price will go from here,” Armor said.

Source: abcnews.go.com