Analysis of the cryptocurrency market's reaction to Donald Trump's second term?

Analysis of the historical performance of the S&P 500 during the presidential terms of the United States from the second term of Bill Clinton to the second term of Donald Trump shows attractive dynamics. Starting with the next decline is the next decline in Bush's first term during the Dot-Com bubble era. In the second term of George Bush, this rate increased and then decreased again. Obama's first term faced a financial crisis but recovered; the second term witnessed a 50% growth. In Trump's first term, this rate increased by 70%, decreased in 2020 but quickly recovered thereafter. Biden's term has seen a 20% increase, the highest level of 2024. Since Donald Trump took office on January 20, 2025, the financial market has become unstable. The S&P 500 index fell 9% from its all-time high of 6, marking the worst start to a presidential term since 2009, when the Great Recession caused a sharp decline due to economic downturn. When the incident occurred, the S&P 500 index had dropped more than 20% in the first two months of Obama's presidency as the economy struggled with the banking crisis.

But today the culprit is not economic recession but rather the instability dominating the market. The trade war tactics, budget impasse, and Trump's refusal to rule out economic recession - elucidated by the statement 'I hate to have to predict things like that' - have sent investors into a panic. The Dow Jones Industrial Average also fell 890 points, while the Nasdaq Composite fell 4%, reflecting widespread risk aversion sentiment. If Donald Trump's policies, such as tax cuts or deregulation, are effective, the market will stabilize and recover by the end of 2025, possibly pushing the S&P 500 close to 6,500, as predicted by Morgan Stanley. However, if the trade war continues or GDP falls by ( as forecasted by the Atlanta Federal Reserve in the first quarter of 2025), the decline will be deeper and the index could drop below 5,000, meaning a drop of more than 16%. The strategic increase in cryptocurrency reserves and the relationship between BTC-SPX 500 Announcement about the (SBR) Strategic Bitcoin Reserve Fund in early March 2025 has caused a brief cryptocurrency price surge. Bitcoin (BTC) has reached $90,000 in a short period of time, Ethereum (ETH) has reached $2,025, and altcoins such as Cardano (ADA), Solana (SOL), and XRP have surged by up to 9%. This situation has also disappeared.

However, BTC has declined along with other cryptocurrencies. Despite its safe haven branding, Bitcoin's correlation with the S&P 500—estimated by analysts to be 0.6—has tied it to the stock market's downturn. The strong optimism that the market will immediately recover has fueled the initial frenzy, but short-term enthusiasm cannot overcome the psychology of fear of widespread risk.

SBR, expected to own 103,500 BTC at launch, is expected to increase the legitimacy of cryptocurrencies, but concerns about economic downturn and customs risks have reduced its impact. If the clarity emerges for the application of SBR on May 5, 2025, as K33 analysts speculate, then BTC could recover to $100,000. But the persistent weakness of the capital owner could push it down to the lowest level in the year. Cryptocurrency News: Highlights in the history of major market downturns Despite this difficult starting point, the historical data of the S&P 500 has provided a worrisome perspective: recessions are usually temporary. To better understand the current fluctuations, we need to examine the historical downturns of the S&P 500. The Dot-Com bubble from 2000 to 2002 dropped by 49% as technology stocks collapsed. The major financial crisis of 2007-2009 caused a 57% drop in the index value to a low of 666 in March 2009.

Over many decades, this index has tended to increase, rising nearly 70% during Trump's first term in office (2017-2021) despite the collapse of COVID-19 in 2020. The COVID-19 incident in March 2020 subsequently led to a 34% decline for many weeks but was quickly reversed by the Fed-led recovery with the S&P 500 surging 114% by 2022. The post-2009 boom, driven by low interest rates and tech sector growth, was derailed by the 2022 inflation, but no major crisis ensued thereafter. The recent decline has been very small compared to these, indicating strong growth — unless Donald Trump's policies push the economy into recession.