Market overreaction. Regulatory signal helps, but does not sustain price alone. Without fundamentals and liquidity, optimism turns into a quick correction. Crypto remains volatile.

The cryptocurrency market experienced a significant surge, reaching nearly $2 trillion, following pro-crypto signals from the Trump administration. According to NS3.AI, this initial boost in market confidence was driven by key regulatory shifts, including permissions for banks to offer crypto custody services and the introduction of a stablecoin framework law. However, the market has since retraced to previous valuation levels.

The initial optimism was short-lived as a combination of cyclical selling, leverage liquidations, and macroeconomic factors led to a sharp sell-off. This downturn has benefited dollar holders amid the ongoing crypto volatility. The market's reaction highlights the complex interplay between regulatory developments and broader economic conditions, underscoring the challenges faced by investors navigating the cryptocurrency landscape.