A year ago, the price of Bitcoin hit a landmark of $100,000, sparking wild celebrations in the cryptocurrency world. With a pro-crypto president set to take office, industry boosters predicted that Bitcoin would surge as high as $250,000 by the end of 2025.

Those rosy projections have not panned out.

Over the last two months, Bitcoin has plunged to a low of $82,000 in late November from $126,000, a nearly 35 percent drop that erased virtually all its gains this year. (Bitcoin rebounded this week, reaching $93,000 on Wednesday.) The prices of other leading cryptocurrencies have also plummeted, with Ether down nearly 40 percent since August.

The causes of the downturn show that crypto, once considered a distinct branch of the financial world, has close ties with the wider economy. The market turbulence has been fueled partly by broad economic trends, like the threat of tariffs and speculation about interest rates. But it was also exacerbated by high-risk practices in the crypto world, where many traders borrow money to increase their bets, leading to steep losses when the market falls.

Even the most established cryptocurrencies remain volatile investments, despite the growing popularity of digital assets in politics and traditional finance.

“The recent sell-off is a good reminder of the risks that come with this space,” said Adam Phillips, managing director of investments at EP Wealth Advisors, a wealth management firm. “Crypto remains a volatile investment and certainly isn’t for the faint of heart.”

The downturn arrived just as the crypto industry was reaching a new level of mainstream acceptance. President Trump ended a regulatory crackdown on crypto and signed legislation that gave a seal of government approval to one of the industry’s most profitable products. He also made crypto a staple of his family’s business empire, starting a crypto firm called World Liberty Financial with his three sons.

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