Are We Headed For Another ‘Crypto Winter’?

0:28Were you here for Thanksgiving? Today's stabilizing. Back in October, Bitcoin reached a record high. Bitcoin more than doubling in value over the past year. Look at this. Year to date up 30%, hitting a fresh record. But just a few weeks later, its price had plunged, taking out over$1 trillion in crypto assets along with it. On Tuesday, it rallied. It was back above$90 ,000. That's left investors and analysts wondering what to make of these dramatic swings. I don't think the pain is over for crypto. When there's a sell-off, there's always the risk that it accelerates beyond what a reasonable person might expect.

1:07Or when there is a sudden recovery and people are like, why is that happening? Nobody really has a good answer. So was the latest crypto sell-off a wake-up call or just par for the course for a volatile market?

1:21I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, what just happened to the crypto market and what can it tell us about crypto's future?

1:39Stacey Marie Ishmael has been tracking the crypto market swings closely. Bitcoin is down almost 30 % from its October high. But she says it's important to put that in context. We're only really down like 10 % on the year. which, depending on how you look at the chart, some people are either having a very good year or a very bad one. And that really, to me, is part of the story of this asset class, right? Cryptocurrencies are volatile by nature. They have long been perceived as a risk asset. They trade in ways that have been described as chaotic. They don't have kind of necessarily predictable patterns because people aren't able to do like corporate cash flow analysis or whatever those things are.

2:19So when there's a sell-off, There's always the risk that it accelerates beyond what a reasonable person might expect. Or when there is a sudden recovery and people are like, why is that happening? Nobody really has a good answer. And that's pretty much what's been going on for the past two months. You and your team have been watching all of this unfold. It ruined your Thanksgiving holiday. At this point, what can you tell us about why it happened? Why we saw Bitcoin and other cryptocurrencies fall from those highs of just a couple weeks ago? I can tell you what people are telling us. OK. So the first thing is going back to this idea of Bitcoin being a risk asset.

2:54What are the things that are supportive of risk assets? A low interest rate environment. You know, the idea that policies will be accommodating to people having lots of money to spend on things. And the very second you have a concern that, say, the Fed is not going to lower interest rates as quickly as people hope they might. Then folks start to get a little bit more conservative about their positioning. A couple of days ago, there were some comments from the Bank of Japan suggesting that interest rates there might be increasing and that had some spillover effect. There's also people who associate crypto in general with Bitcoin very specifically with the fortunes of the Trump White House and its policies around crypto because Trump was, when he was inaugurated, you know, some of his very first executive orders were perceived as being very supportive of cryptocurrencies.

3:38I pledged that we would bring back American liberty and leadership and make the United States the crypto capital of the world. And that's what we've done. There was this idea of establishing a Bitcoin reserve. If you talk to various people in the industry, they might say things like, well, you know, legislation hasn't moved as quickly as we would like. We're not seeing as many changes as we want. Or, yes, we got those things. But, you know, what else is going to come? Like, is there anything else that they're going to do? So all in all, it's been an environment in which there are not a lot of reasons for people to buy with high conviction, but there have been a lot of reasons for people to sell.

4:10You having lived through downturns in the crypto market before, does it feel familiar? Does it feel different? We know that crypto winter from a couple of years back. Does it feel eerily similar? The former CEO of failed crypto firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the U.S. government. Just how long is winter going to last and how cold is it going to get? Like, how much lower is Bitcoin going to go? Well, nobody's filed for bankruptcy, which is a big, big difference from that time around. And we haven't seen anybody arrested in the Bahamas and, you know, taken into custody.

4:45So there are very many elements of this that are different. And in addition to a much more, shall we say, explicitly constructive policy environment, we also have the fact that the market structure is different. You know, crypto ETFs didn't exist in 2022. And to an extent, they have provided almost an institutional floor because so many retail investors are interested in these things. They have them in their 401ks. We have on the other side, this idea of the digital asset treasury company, which kind of existed with MicroStrategy, now called Strategy. But now you have various other companies that used to be like e-commerce firms saying we want to pivot and hold Bitcoin as our balance sheet strategy.

5:25So I think it's hard to draw an immediate like-for-like comparison to what was happening in 2022. But I would say until we start to see like real – this feeling of panic selling as opposed to this kind of steady burn, then we're still in a very different environment. Let me stick with those ETFs because it sort of lent a level of legitimacy to this market that it didn't have before. Beyond that, sort of how has it shaped the way that this market reacts having what about a dozen of these ETFs now? More. More than that. Forgive me. So many more. Our analysts in Bloomberg Intelligence have a very long spreadsheet of all the different crypto style ETFs.

6:02Yeah, there's Bitcoin, but there's also like Dogecoin and Ripple and other things. Do they buffet the market? Not all of them are very popular. So, you know, the biggest one by far, which does have a very significant number of assets, is Ibit, which is from BlackRock. But one of the things that ETFs have done is introduced a wider range of people to the idea of having exposure to crypto as an asset class, which is just a different way of thinking about it, right? Yeah. You still have to be the kind of person who thinks about what you want in your 401k and have like some contact with a financial advisor, generally speaking.

6:35But, you know, if you didn't want to have to figure out like how to set up a crypto wallet, how to buy Bitcoin directly, what's a stable coin. Now you can just be like, oh, this can diversify my portfolio. And that was really seen by the industry as a huge step in that legitimacy that you're describing. On that pathway to normalization or legitimization, you had Vanguard, second largest asset manager, this week announcing that its customers can trade ETFs, mutual funds that are crypto heavy on their platform. How big a moment is that in the evolution of this asset class? From a narrative perspective, enormous.

7:07Did it have any major consequences on the crypto price? Kind of. I will say that, you know, they have been the last really big holdout. A lot of people have been just waiting for the moment in which they would say yes. And of course, this comes after, you know, they have a new CEO who comes from the world of crypto ETFs, was like part of the team responsible for driving forward IBIT that we just mentioned. So I think that was kind of one of those things where the news was not so much that it happened, just that it happened this week because it was one of those things that people were very much expecting.

7:37This is a risk asset class, risky asset class, I should say, as well. And we've seen, what,$19 billion of leverage bets wiped out over the course of this sell-off. Explain exactly what that means in basic terms. Imagine you could, you know, take a position on something, but you do it by borrowing money. So you're like, oh, I want to make a$5 bet, so I'm going to borrow$5. So you don't actually have$5. You've borrowed$5. And if that bet goes in your favor, like, fantastic. like now you have like five, possibly$10, depending on how it's structured. If that bet moves against you, now you owe money that you didn't have in the first place.

8:11Don't come for me. That's a wild rovers implication of how these things work. But generally, it's this idea of people putting up capital that is in fact more than they can necessarily comfortably repay because they were expecting prices to move in a particular direction and actually those prices moved against them. What does that tell you about this market, that there has been a hearty appetite for risk, a confidence that it's going to keep going up? It just goes back to that idea of risk assets, right? And for a good chunk of this year, it was like the narrative was like, you know, crypto is back, Bitcoin is back, the entire environment is supportive of it.

8:44So the shift in October where we saw what we thought was like initially kind of a flash crash because it was very sudden and very aggressive. But the market hasn't been able to come back from that. And that is, I think, indicative that there might be some repricing towards a lower level, right? Right. So if the bulls were expecting we enter 2026 at anywhere from 150 to 1 million, depending on how ambitious you are, we're, you know, we're kind of closer to 90 right now. And that may be where we end December. I think there's a tendency to focus on Bitcoin, the OG cryptocurrency. It's the biggest.

9:15Has the sell-off been across the board, all cryptocurrencies wrapped up in it, or have there been any standouts that haven't been affected? I wouldn't say anybody hasn't been affected. I will say some things have been hit harder than others. So at the very, very risky, highly speculative end of the market, you have like the meme coins, right, which are in the names like based around memes. But there have been two very high profile meme coin launches this year, one named after the president and one named after the first lady. And those have been hammered to an extent that is in a lot of ways like more intense than we've seen in other corners of the market.

9:47And we've also seen kind of a similar effect on other Trump family related crypto properties, right? We've been tracking the decline in shares of American Bitcoin, which is a crypto mining currency associated with Eric Trump. And so it does feel like there is something different that is happening with the kind of the Trump family crypto portfolio as opposed to the wider market. Coming up, how Trump and his family continue to influence the crypto market. And Stacey Marie and I dig into what the president's attempts to prop up the market could mean for its future.

10:32It seems like a lot of the enthusiasm or wider embrace of crypto was brought about by the Trumps and the Trump administration taking a different tack toward digital assets. A fair way to say that. With today's signing, the future of crypto and the crypto industry, the U.S. dollar working together because they really are hand in hand is going to be stronger and bigger and better than ever before. Can you just explain sort of what that's meant in real terms? So we see regulators that aren't acting as muscularly as they did during the Biden administration. But beyond that, what has that change in approach meant for the industry as a whole?

11:07I think from the industry perspective, sometimes people say it was like, oh, act first, apologize after. They're just acting because there isn't even a need to apologize. Right. There isn't a fear or a concern that someone will launch something, do something, try something, and they'll immediately be confronted with like a Wells notice or, you know, a regulator being like, just a reminder about prudential regulation. So it certainly has liberated, I would think, the approach of the industry in terms of how quickly they want to launch products, how risky those products can be. Like one of the big things that we certainly saw in 2025 is, you know, if you're a crypto company or a fintech with any kind of crypto related thing, you're like, I want to IPO.

11:43I want to raise money. I want to get engaged in M &A because it's like this perception was like we have a window. We don't know how long this window will be open for, but we're going to take full advantage. Can you describe the contours of the galaxy of digital asset involvement this president and his family have? So you mentioned American Bitcoin, this Bitcoin mining company, the Trump meme coin, the Melania meme coin. How expansive is it? It's very wide ranging. And I think that it's also not necessarily visible all the time because like Trump Media, for instance, which runs the Truth Social platform, the messaging platform of choice of the president, has arrangements with crypto companies, famously one called Crypto.com, to investigate the launches of like crypto related ETFs.

12:26They're doing things like potentially getting into prediction markets, which is different from crypto proper, but I would say ideologically similar in that it's another mechanism through which people can take different approaches or entry points into the financial system. Then, you know, you have the World Liberty Financial, of which Trump, the president, is listed as like the sort of emeritus member of it, but which is largely run day to day by other parts of the family, which is working on a stable coin. They have described themselves as, you know, a DeFi, a decentralized financial platform.

13:00So I would say lots of pies, lots of fingers in those pies. Not necessarily a lot of specific economic activity that we can yet point to, but we're certainly paying attention. How big a deal is the Trump family as kind of a hype machine in this space? So I saw that Eric Trump was interviewed by Bloomberg News. In November. Commenting on this dip. And he said, what a great buying opportunity. With crypto comes volatility. Volatility is our friend. Volatility is something that should be harnessed, right? And so I think Bitcoin is going to continue to massively overperform the markets. Does that make a difference when you have a family that is so heavily invested in this space saying something like that?

13:39Is it encouraging others? Is it effectively encouraging other people to behave in a certain way? The president and the family and everyone associated has been very explicit repeatedly that there are no conflicts of interest to be found anywhere in any of this involvement. At the same time, they have been very high profile, very visible, very public, explicit exponents of the values of different parts of this ecosystem, whether from their own personal investments or one or more of the Trump sons effectively attending every crypto conference of note to talk up digital assets. And then you have other high profile members of the administration, including Howard Lutnick, who, you know, his family firm, Cantor Fitzgerald, very famously was kind of, I think, responsible for the turning point in the perception of Tether, the world's largest stablecoin company, because, you know, Lutnick came out a couple of years ago and said, like, Tether has the money that it says it has.

14:31And that just changed the game entirely for Tether. And they're now seeking to raise quite a lot of money at a very, you know, SpaceX-y, open AI type valuation. So I wouldn't say that there is no effect. It's just not always that the effect is like as direct as folks might make it out to be. How do you see these assets in kind of the broader sweep? I remember when there was a lot of talk about it being an inflation hedge. Now we've kind of seen it move in concert with riskier tech stocks. What can digital assets tell us about the overall market? I will once again tell you what people say. Certainly there's an idea that it is an inflation hedge.

15:09You know, one Bitcoin is one Bitcoin is the phrase that's sometimes used. I do think because Bitcoin trades 24-7 and crypto trades 24-7 and it's a market that's open when other markets are closed, it sometimes acts like a futures market, right? that if something happens in the world that people are either bearish or bullish on, we will often see a move in crypto that doesn't feel like crypto specific, but more like, oh, this is open and I can trade it. I'm going to do that. And then other markets catch up. That is absolutely a phenomenon that is well established. It's been happening for a while.

15:36There's real things that are going on there. But I do think a third is just this general risk and sentiment barometer, because it's the kind of thing for a lot of people where it's not a core part of your portfolio. Yes, there are hedge funds that are entirely dedicated to digital assets. You can definitely find a financial advisor who's like, you're 85? Sure, put all your money in Bitcoin. That is a thing that exists. But for a majority of investment professionals, it's the kind of thing where you're like, this is an interesting place to diversify. And if the rest of your portfolio is underperforming and crypto is doing well, fantastic.

16:08But if crypto isn't doing well, you might ask, OK, well, should I put my money in gold or in silver or something else where you might be seeing better and more immediate returns? The uniqueness of this space, this asset class is things can turn around pretty quickly. Tomorrow it might be. Right. We're seeing Bitcoin climb higher and Cardano and Ether. What does history tell us about the way rebounds work with cryptocurrencies? What makes them stay? What makes it not just an anomalous blip where we see them going up after a huge sell-off? What tends to give them staying power? And how do you think about that in the context of this particular sell-off?

16:40One of the things I do in the Bloomberg terminal is there's a function that lets you look at news events versus prices on a chart. And I spend a lot of time staring at that, trying to figure out, OK, like what what has been driving crypto? And it is true that really significant actions that prop up a certain narrative have helped rallies in the past. Right. So, you know, in July of last year, when, you know, Donald Trump goes to a conference for the Bitcoin faithful and says, like, I want to make the United States the Bitcoin capital of the world. that absolutely precipitated a run-up that, you know, kind of peaked for a while in January or, you know, going back two years when like Bitcoin ETFs were approved or on the other side when Sam Bankman-Fried got arrested and FTX collapsed and we're like, haha, that doesn't seem good.

17:23So right now what's missing is this like single thing. So people are like, oh, is it going to be the Vanguard announcement about ETFs? Is it going to be, you know, whoever replaces Jerome Powell? Yeah. And we just haven't seen a big catalyst. And we're sort of running out of days this year for something really big to happen.

17:46This is The Big Take from Bloomberg News. I'm David Gurra. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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