Wall Street Rethinks Trump 2.0’s Impact as Crypto and Stock Bull Runs Face Further Delays

Key Takeaways

• Economists are reassessing the effects of Trump’s aggressive policies, with concerns over short-term growth disruptions.
• Trump’s tariffs and brutal immigration policies, though aimed at stimulating growth, could dampen business investment.
• The cryptocurrency market, especially altcoins, is facing a liquidity crunch with declining trading volumes.

As President Donald Trump begins his second term, Wall Street is grappling with the potential long-term impact of his aggressive policies on both the U.S. economy and the financial markets.

Despite promises of pro-growth measures, including tax cuts and deregulation, economists are concerned that his latest moves, including new tariffs and spending cuts, may disrupt short-term growth and delay any market rallies.

While the stock market has been reacting to these policy shifts, the cryptocurrency market is also facing its own set of challenges. Altcoins, in particular, are struggling with a liquidity crunch, which has put a damper on any near-term recovery.

With economic uncertainty lingering, both traditional markets and the digital asset space are facing further delays in the much-anticipated bull runs that many had hoped for.

Concerns Over Growth Delays

In his second term, Trump has doubled down on economic policies he believes will ultimately drive U.S. prosperity.

These include significant tariffs—such as a 25% duty on imports from various countries—and a tough stance on immigration. Trump is also pushing forward plans to reduce federal spending, with cuts that could reach $1 trillion.

While these policies may eventually deliver benefits like tax cuts and deregulation, economists warn that their short-term effects could be disruptive.

Some analysts now caution that the full impact of these measures may not be felt until next year. The uncertainty surrounding these policies is keeping businesses on edge, particularly as they wait to see how the administration’s aggressive actions will shake out.

Economists are particularly concerned that the combination of trade restrictions and immigration barriers could stifle business investment, undermining the economic growth Trump is hoping to stimulate.

For now, the outlook remains cautious, with many experts advocating a “wait-and-see” approach as the policies unfold.

 Trump’s Trade Policies Stir Global Ripples

Trump’s trade policies have already left their mark on financial markets.

Each new announcement has sent investors into a tailspin as markets wait to gauge the potential fallout from his tariff actions.

While U.S. stocks have been subdued, the effects of these tariffs are being felt more strongly abroad.

For example, Chinese retaliatory tariffs on U.S. goods caused Hong Kong’s Hang Seng index to rise to a four-month high, fueled by optimism around AI and chip stocks.

Chinese electric vehicle stocks, notably BYD, surged after introducing new features, further highlighting the impact of global trade dynamics.

Crypto markets, on the other hand, saw one of its largest liquidation events, wiping out over $400 million from the total market cap and billions in leverage positions.

Crypto Struggles Amid Liquidity Crunch

The cryptocurrency market is also facing significant challenges, particularly altcoins.

As liquidity dries up and trading volumes continue to fall, altcoins are struggling to regain momentum. While Bitcoin (BTC) remains relatively stable, altcoins are experiencing a deep liquidity crunch reminiscent of the volatile pre-COVID-19 era.

Many altcoins, particularly those with high Fully Diluted Valuations (FDVs), are seeing their value erode due to inflated prices set during fundraising rounds. This has led to reduced real demand and heightened selling pressure.

Recent altcoin projects, including Ethena (ENA), LayerZero (ZRO), and Celestia (TIA), have seen massive losses, with some losing over 60% of their value from their all-time highs.

As Bitcoin’s dominance grows to 61%, altcoin dominance has dropped 19% this year, indicating that investors are fleeing riskier assets in favor of more stable investments.

If the liquidity crunch continues, a sustained rally for altcoins seems unlikely. Some analysts predict the downturn could last until 2025 or 2026, with altcoins potentially reaching rock bottom before a prolonged recovery begins.

The market’s current volatility, compounded by Trump’s economic policies, has left investors uncertain about the short-term future of both the stock and cryptocurrency markets .

With economic growth potentially stalling and the cryptocurrency market facing liquidity issues, the outlook remains unclear for many riskier assets.