Biweekly Market Update: US Policy Sparks Crypto Volatility: Traders on Edge

The cryptocurrency market has been anything but stable in recent weeks, with political events, economic shifts, and investor sentiment causing extreme price swings. A historic market crash followed by a policy-driven surge has left traders navigating heightened volatility. At the center of the storm is US President Donald Trump’s aggressive approach to financial policy, which has fueled both excitement and skepticism. His surprise announcement of a US Crypto Strategic Reserve sent prices soaring — only for the market to reverse course days later, leaving many questioning whether government involvement will stabilize or destabilize the industry.

Beyond the policy shifts, global tensions and stock market volatility have added even more uncertainty. Bitcoin plunged below $80,000 before rebounding, closely mirroring geopolitical events, most notably Trump’s heated Oval Office exchange with Ukrainian President Zelenskyy and the potential for new US tariffs. Meanwhile, investors are watching crypto ETFs closely, as recent trading volumes indicate growing institutional influence on price movements. With the White House Crypto Summit on the horizon, the market remains in a fragile state, with traders weighing whether this turbulence is a short-term correction or the beginning of a larger shift in the digital asset landscape.

Trump’s Policy Moves Shake Crypto Markets

As has been the continued trend since Trump was inaugurated on Jan 20, 2025 (following a short-lived all-time high celebration for Bitcoin), cryptocurrency has seen significant turbulence. Its top asset plummeted by as much as −28.3% from an all-time high of $109,115 to a low of $78,226 to close February. In fact, February’s decline marked Bitcoin's largest single-month drop since June 2022. The broader crypto market’s downturn mirrored this movement, shedding over $640B in just 25 days — an 18% reduction that brought the total crypto market capitalization down to $2.9T.

Bitcoin price and trading volume

Trump's Confrontation With Zelenskyy

On Feb 28, 2025, a heated exchange between Trump and Ukrainian President Volodymyr Zelenskyy in the Oval Office unsettled and polarized the crypto community. This confrontation occurred amid discussions of a potential end to the war between Russia and Ukraine. The meeting coincided with expectations of impending US tariffs on key trading partners, raising concerns about global economic stability. In the graphic below, we can see the moments in which:

• Zelenskyy (blue) trended following his meeting at the oval office with Trump
• Trump (red) trended following his announcement of the US strategic reserve
• Tariffs (yellow) trended following aggressive new developments regarding Trump’s plan for tariffs toward other countries

Social volume frequency of Zelenskyy, Trump and tariffs

Diplomatic unpredictability rattled markets, causing fluctuations in both traditional and crypto assets. Investors watched geopolitical developments closely. On Polymarket, as we can see below, voting participants reflected that the odds of a Russia-Ukraine ceasefire by year-end spiked to 63% following the Trump-Zelenskyy meeting.

Social media post from @MrStealth27 on X indicating the Polymarket odds of Russia and Ukraine resolving their conflict

Is the US Crypto Strategic Reserve a New Frontier — Or One Big Tease?

In a groundbreaking move (at least on the surface), President Trump announced plans to establish a US Crypto Strategic Reserve, aiming to bolster the nation's position in the digital asset space. This reserve would include major cryptocurrencies, such as BTC, ETH, XRP and SOL.

The announcement had an immediate impact on the crypto market. Bitcoin's price surged over 10% on Mar 2, 2025, climbing above $94,000 following the news, but experts expressed concerns about the plan's feasibility and potential risks, including funding sources and the implications for the US dollar's global standing.

Despite this sharp decline, there were signs of a modest recovery. As recently as this past weekend, optimism briefly returned after President Trump announced the creation of a US Crypto Strategic Reserve, aimed at strengthening the country’s role in digital finance.

Social media posts from Donald Trump on X related to the US Crypto Reserve

Crypto prices surged after the announcement, only to pull back by Monday as investors reassessed its impact. In classic crypto fashion, the crowd was excited about Trump’s announcement (as it coincided with a price rally), and quickly became skeptical (after it led to a disappointing retracement).

Questions quickly arose about why certain cryptocurrencies — such as XRP, Solana and Cardano — were included in the reserve, and how it would actually function. Without clear answers from the government, crypto traders resorted to humor and speculation, while waiting for more details, which are expected to be addressed at an upcoming White House Crypto Summit.

Context of trader emotions behind Bitcoin’s late February and early March price volatility

Nothing More Than a Correlation With Stocks?

The market decline wasn’t solely a crypto-driven event — in fact, a strong argument can be made that crypto’s decline is directly related to the major drawdown seen by global stock markets. The SP 500 dropped −4.8% from Feb 19–Mar 3, 2025. Though this may sound modest in terms of crypto returns, this sharp two-week drop is considered quite stunning in the equities world.

Timing of Trump tariffs and US crypto reserve announcements, with resulting price movements

Most of the price actions (and the explanations for them) have mirrored the geopolitical explanations we’ve heard for traditional stock markets fluctuating the way they have. Cryptocurrencies, like equities, are clearly sensitive to the current situation in the United States. And institutional and retail traders alike are hanging on Donald Trump’s every word, for the time being. Considering the tight correlation between crypto and equities — and the clear overlap that many institutional investors now have in investing in both simultaneously — this is a new development to which many traders may not be accustomed.

Rest assured there will be moments when crypto will break free of the grips of traditional stock market fluctuations, no longer vacillating like a “high leverage tech stock” (as the meme has been implying for a couple of years now). The biggest bull markets in cryptocurrency have come when there’s been zero correlation between the two sectors (neither positive nor negative), so keep an eye on the days where BTC and the SP 500 are moving in opposite directions. This is generally the signal savvy traders wait for.

Bitcoin Network Growth Has Picked Up in Midst of Volatility

The amount of non-empty wallets on Bitcoin’s network has now grown by approximately 50K from Feb 5–Mar 5, 2025. This is a sign that crypto traders aren’t shaken by the huge current volatility across crypto. It also indicates that many traders are choosing to liquidate their more speculative investments (such as meme coins), and moving their capital to Bitcoin for safe(r) keeping.

Progression of net wallets gained/lost from small, medium, and large Bitcoin wallets

Note that the main growth has been coming from the small wallet tiers. The number of wallets with less than 0.1 BTC has grown by 37,390 during this time, while the number of wallets containing between 0.1 and 100 BTC has grown by 12,754. The largest wallets — key stakeholders with at least 100 BTC — have actually declined by six.

As you may guess, the behavior of these wallets (with the highest amounts of capital) typically dictates the price. So, despite the network continuing to blossom, the optimal setup for a 2025 bullish breakout occurs when all three of these tiers are rising simultaneously — or at least seeing the over 100 BTC tier begin to surge.

Average Trading Returns Have Recovered to Neutral

Many traders new to cryptocurrency often try to apply the basic advice of “buy low, sell high.” However, within this sector, defining what the highs and lows actually are can be nearly impossible. This is why uses a methodology known as MVRV (market value to realized value) to identify whether traders are actually up or down money over a period of time. In the chart below, we look at the average returns of wallets active in the past 30 days (in orange) and 365 days (in teal):

30-day and 365-day MVRV (average trading returns) visualized by their optimal buy and sell points

As we can see, the average returns of the 30-day MVRV dipped into the “Opportunity Zone,” which indicates a historically profitable time to buy based on the fact that traders were losing about −17% on their investments on average. For now, both the short term and long term have essentially hit the “reset button” and are sitting in neutral territory. Yet, with the current market volatility, don’t be surprised if you see these two important indicators swing into the Danger Zone or Opportunity Zone again by our next biweekly report.

Taking Advantage of Crowd Overreactions

The crypto market's volatility was further exacerbated by investor behaviors, characterized by (FOMO) and (FUD). These emotional responses often lead to price movements opposite to prevailing predictions. For instance, as Bitcoin's price declined on Feb 27–28, 2025, many retail traders panicked and sold off their holdings, only to see prices rebound shortly after. Conversely, during price surges on Mar 2–3, 2025, FOMO-driven buying often led to subsequent corrections and easy profit-taking for , catching latecomers off guard.​

Social media trends have consistently suggested that when price discussions focus on high targets above a coin’s current value, a market top is near, whereas widespread talk of lower price expectations often signals a bottom. Over the past week alone, we saw fantastic examples of this signal demonstrating its predictive power. High blue candles represent moments when the crowd has been targeting $50K–$69K price levels for Bitcoin, and high red candles represent moments when they’ve been targeting $100K–$120K.

Social media mentions of $50K–$69K vs. $100K–$119K BTC price levels

Social Volume Trends Reflect Traders Becoming More Bearish Long-Term

Based on a three-month analysis of some popular long-term topics, we’re seeing a decline in social media discussion related to topics typically associated with greed and FOMO (such as and ). At the same time, there’s a gradually increasing level of discussion related to and tokens.

Social volume among popular social media topics over the past three months

Generally, this is a strong sign that we’re seeing a healthy level of fear from retail traders, who are finally straying away from some of the more risky aspects of cryptocurrency. It’s a bullish sign when there’s a healthy, growing level of fear and apprehension about getting scammed or losing too much money on speculative assets. Markets move in the opposite direction from the crowd’s expectations — meaning that the crowd’s bearishness is a key ingredient you may have been waiting for to begin seeing bullish momentum again.

ETF Movements Reflect Market Sentiment

(ETFs) linked to cryptocurrencies have also experienced notable activity at the end of February and beginning of March 2025. The market downturn has led to significant outflows from crypto-backed ETFs, with investors pulling substantial amounts amid declining asset values. The overall level of trading volume has understandably picked up in the process, with an average of over $3.6B per day being traded since Feb 20, 2025.

Daily total trading volume (in USD) for the seven largest Bitcoin ETFs

These ETF movements mirrored broader market sentiment, reflecting investors' increasingly polarized and reactive approaches in response to heightened volatility and external economic pressures. The interplay between ETFs and underlying crypto assets continues to be a critical factor in assessing market health and investor confidence.​

Looking Ahead and Staying Levelheaded

With ongoing macroeconomic shifts and stock market volatility, crypto markets face short-term uncertainty. The impact of ongoing geopolitical tensions, tariff discussions and a potential US Crypto Strategic Reserve could continue fueling price swings, making the coming weeks challenging for both retail and institutional investors.

Bitcoin’s correlation with traditional markets, which manifested during the SP 500’s sharp −4.8% drop, suggests that outside economic forces will keep playing a major role in crypto’s performance. At the same time, ETF inflows and network growth metrics indicate that institutional interest in digital assets remains strong, which could help stabilize prices over time.

Despite the short-term unpredictability, long-term signs are emerging that point toward a potential breakout later this year, such as:

• Bitcoin’s network activity continues to expand
• ETF trading volumes remain high
• Market sentiment is beginning to reflect peak fear (a reliable bottom indicator)

Historically, the biggest crypto bull runs have come after periods of extreme pessimism, and on-chain data is suggesting that traders may soon shift from panic to accumulation. If key macroeconomic conditions improve and institutional buying strengthens, Bitcoin could return to the $100K+ range before the end of 2025. For now, the market remains volatile, but history suggests that those who navigate the turbulence wisely could be rewarded in the long run.

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.