Trump’s White House Return Fuels Crypto Rollercoaster Amid Tariffs and Volatility
Donald Trump’s return to the White House initially injected bullish momentum into both crypto markets and traditional finance. Bitcoin surged to new highs in January, while equities also climbed. But the optimism was short-lived. A swift rollout of tariffs by the Trump administration reignited market volatility, rattling investor confidence, according to Kaiko’s Q1 2025 report.
Altcoin Volumes Slide as Volatility Spikes
Weekly trading volume for ether and the top 10 altcoins fell sharply — down 30% from levels seen before the U.S. election. Q1 volumes averaged $266 billion, with Kaiko attributing the decline to reduced risk appetite amid aggressive price fluctuations and weakening demand on offshore exchanges.
“Altcoin volatility soared in early 2025, hitting multi-year or even all-time highs for some tokens like Cardano (ADA),” wrote Kaiko researchers. Bitcoin’s volatility followed suit, jumping from 34% in February to 51% in March. However, it remained below the peaks seen during last August’s carry trade unwind. The widening volatility gap between Bitcoin and altcoins is likely to deter conservative investors from re-entering the space anytime soon.
Bitcoin Outpaces Alts but Trails Equities and Gold
Despite leading the crypto pack, Bitcoin struggled in broader markets. Down around 25% from its January high, BTC underperformed both U.S. equities and gold during the recent sell-off. Still, it fared better than most altcoins, particularly those in the AI and meme sectors, which saw average losses of over 50%.
Kaiko analyst Dessislava Aubert noted that, “While hopes for U.S. rate cuts are rising, this isn’t the kind of easing cycle markets had envisioned.” Bitcoin ended Q1 down 12%, marking its worst quarterly performance since 2018.
Liquidity Anchored by U.S. Exchanges
The decline in altcoin liquidity — down 30% — was most pronounced outside the largest tokens. In contrast, Bitcoin’s liquidity was stabilized thanks to major U.S.-based exchanges like Coinbase, Kraken, and CEX.IO. These platforms helped cushion BTC’s slide, with their share of global BTC market depth hitting a two-year high of 58% before dipping slightly in late March. Together, they now represent 60% of Bitcoin’s market depth — the highest among global exchanges.
Options Markets React to Tariffs, But Calls Still Dominate
Trump’s tariff announcements sparked a notable spike in options market volatility, especially in short-term at-the-money contracts. Investors scrambled to reassess their positions as macro headwinds overpowered previous catalysts such as the 2024 Bitcoin halving and major global elections. Despite the turbulence, Kaiko noted that calls still dominated trading volumes, a sign that overall sentiment, while shaken, had not collapsed.
Looking Ahead: Q2 Could Offer Relief
Historically, Q2 brings positive momentum to both crypto and equities. While the ongoing trade war could disrupt this seasonal trend, analysts see several tailwinds. Kaiko’s Adam McCarthy emphasized the institutionalization of Bitcoin as a potential driver. Altcoins, he added, will need similar regulatory advancements — such as ETF approvals — to participate in any upcoming rally.
“If altcoins are to join a second-half bull run, new exchange-traded products will be key,” McCarthy said. Over 40 ETF applications are currently awaiting SEC review under newly confirmed Chair Paul Atkins, whose pro-crypto stance has been welcomed by the market.
Stablecoins and Legislation Offer Further Hope
Growth in the stablecoin market also bodes well. The supply of dollar-pegged stablecoins like USDT and USDC surged by 33% since late 2024, topping $230 billion. Historically, such expansions have preceded rallies in broader asset classes. Congress is also advancing two bills aimed at standardizing the stablecoin landscape, potentially accelerating adoption.
Despite imposing sweeping tariffs on April 2, President Trump paused their enforcement for 90 days — a move that sparked a short-term rally as trade fears momentarily eased.
Kaiko analysts concluded that clear regulatory frameworks and continued de-escalation could improve sentiment, particularly for Bitcoin. “As crypto regulation evolves, Bitcoin could start decoupling from traditional assets,” said Aubert. A weaker dollar, she added, could further enhance Bitcoin’s appeal — a sentiment echoed by Bitwise CIO Matt Hougan in a recent investor note.
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