President Trump’s 2025 return to power brought big changes to US crypto policy, sparking wild market swings. His administration promised a pro-crypto approach, including a potential Bitcoin reserve and a softer stance from the SEC. But instead of a sustained rally, the crypto world saw volatility and investors pulling out.
Unmet Expectations and Profit-Taking
Experts say the market had already priced in a best-case scenario. When the promised government Bitcoin purchases didn’t materialize beyond talk, traders cashed out. It was a classic “buy the rumor, sell the news” situation. The lack of actual government buying removed a key potential growth driver, triggering a sell-off.
Institutional Investors Jump Ship
Large funds started selling Bitcoin and Ethereum futures as early as February 2025, taking profits from the December 2024 highs. By March, this selling intensified, with futures prices falling below spot prices – a clear sign of dwindling investment.
Macroeconomic Troubles Add to the Mix
Simultaneously, Trump’s trade war – slapping tariffs on Mexican and Canadian imports – rattled the economy. Treasury yields fell, and the S&P 500 dropped to post-election lows. Crypto, being a risky asset, also suffered, further pressured by a Bybit hack. Analysts point to these broader economic concerns as the main reason for March’s price crash, overshadowing any positive crypto sentiment.
Web 3.0 Projects Feel the Pinch
March saw huge capital flight from the crypto market, hitting funds, ETFs, and DeFi (decentralized finance) hard. Investors pulled a record $2.6 billion from US Bitcoin ETFs in late February – the biggest weekly outflow ever. The total crypto market cap shrank from about $3.7 trillion in December to $3.1 trillion by the end of February.
DeFi also took a beating, with the total value locked (TVL) in DeFi protocols dropping by roughly $45 billion. Crypto hedge funds and arbitrage traders also suffered significant losses as market shifts disrupted their strategies.
The Shift in Capital Flow
By March, the trend was clear: Institutional investors were pulling out, margin calls were triggering liquidations, and retail investors were spooked by the volatility. This reduced funding for Web 3.0 startups, with venture capital investment falling further. Regulatory uncertainty also remains a major concern.
Advice for Web 3.0 Founders
Given the current climate, founders should focus on two phases: stabilization and growth.
Stabilization: Conserve resources, keep your team, refine your product, and satisfy existing users. Avoid risky bets. Focus on short-term goals like delivering promised features and improving user experience.
Growth: As the market recovers, prepare to scale. Develop strategies for user acquisition and capital. For DeFi projects, consider liquidity mining programs or partnerships. Infrastructure projects should explore collaborations with corporations likely to adopt blockchain technology as regulations clarify.
Web 3.0 projects need to operate more like traditional businesses, with clear business models and paths to profitability. Projects with real revenue, engaged users, and genuine utility will thrive. Founders should honestly assess their projects – if it’s not working, consider pivoting or merging.
Conclusion
This crypto correction, fueled by both Trump’s policies and broader economic factors, is different from past downturns. The increased role of institutional investors and new market structures like ETFs have introduced new types of volatility. However, the Web 3.0 industry is gaining something crucial: high-level political support, even if for questionable reasons. This sets the stage for long-term growth. While tough times are ahead, projects that weather the storm will be well-positioned for the next bull market.
