After the Renaissance: Crypto Meets Its Reckoning

By TMC Research Staff | The Milwaukee Company | tmcresearch@themilwaukeecompany.com

• Crypto’s Trump-era surge has reversed as macro pressures, rising rates, and geopolitical risks triggered a sharp correction and erased over a trillion dollars in value.

• Structural weaknesses remain, including high leverage, opaque stablecoins, and ETF products that provide access but limited investor protections.

• Crypto continues to behave like a high beta equity, highlighting the need for real transparency, better pricing mechanisms, and genuine use cases to achieve lasting stability.

When we wrote nearly a year ago about crypto’s “renaissance” in the wake of President Donald Trump’s return to the White House, Bitcoin had just surged past $95,000 and the digital asset complex was basking in glory with total market cap exceeding over $3 trillion. Deregulation was back in vogue, the SEC had finally approved spot Bitcoin ETFs, and the Trump campaign’s embrace of crypto gave believers something they had always craved: political capital at the highest echelons of the U.S. government.

Yet the reality of the past twelve months has proven more complicated. The same political environment that once set the stage for Bitcoin’s rise has now become a sobering lens through which we evaluate the structural weaknesses that never fully disappeared. While crypto enjoyed its moment in the sun, the subsequent correction has forced a reconsideration of what the past year has truly achieved.

Euphoria Peaks and the Market Turns

Bitcoin’s dramatic surge above $125,000 early in the autumn was fueled by growing acceptance across Wall Street, record inflows into spot Bitcoin ETFs, and a continued belief that the administration was preparing to treat Bitcoin as a strategic national asset. The optimism felt powerful and at times rather eerily reminiscent of earlier boom cycles observed in 2017 and 2021.

The CoinDesk 20 Index , which measures the performance of the 20 largest and most liquid digital assets has dropped over 21%

But within weeks the momentum shifted. As interest rate expectations shifted and tariff concerns with China lingered, Bitcoin prices declined. Additionally, as macroeconomic concerns resurfaced with a subdued labor market and questions about the state of the consumer economy, prices fell further, dropping to nearly 87,000 by mid-November. More than a trillion dollars in notional value vanished across the market. Liquidations swept across leveraged positions and the same cryptocurrency traders who had celebrated the rally as a sign of lasting structural change found themselves confronting once again the unforgiving nature of crypto’s sentiment driven cycles.

The Limits of Political Sponsorship

These developments revived questions that lingered beneath the surface even during the most exuberant moments of the Trump era. Chief among them is whether political friendliness can truly substitute for the kind of regulatory clarity the industry has long avoided. The administration’s embrace of crypto elevated the narrative and helped inspire a flood of new capital, yet it could not insulate the market from broader economic forces. Political warmth cannot change the mechanics of leverage, liquidity, or macro cycles.

The proposal for a national Bitcoin reserve remains emblematic of this tension. It captured imaginations and later generated executive directives, but its practical framework remains unresolved. Agencies continue to study its implications, Congress has taken no decisive action, and the long-term consequences for the dollar and the global financial system remain unclear. The idea may continue to serve as a symbol of support, yet symbols alone cannot sustain a market that remains highly sensitive to economic stress.

Lessons of FTX and the Persistence of Old Patterns

The structural risks that came into view after the FTX collapse have not entirely disappeared. Courts delivered billions in restitution and judgments over the past year, marking an important step toward accountability. But the system that produced those vulnerabilities remains largely intact. Leverage has not meaningfully declined. Perpetual futures still dominate exchange trading volumes. Open interest remains concentrated on a small group of exchanges that are themselves exposed to sharp swings in liquidity.

The rapid unwinding of positions during the latest correction demonstrated how easily a single shock can cascade across the ecosystem. While regulation has intensified in some areas, the underlying market structure continues to amplify volatility. The industry has moved away from the most obvious failings of the FTX era but has not yet built the guardrails needed to prevent similar dynamics.

The ETF Era and its Complications

The rise of Bitcoin exposure through ETFs has reshaped the investment landscape. These products have attracted institutions and have shifted trading from offshore venues to regulated platforms. This shift represents real progress compared with the environment that existed only a few years ago.

Still, several risks remain. Many of the most popular Bitcoin ETFs are structured as trusts or commodity pools rather than as registered investment companies. They provide familiarity and ease of access, yet they do not offer the full set of investor protections associated with 1940 Act funds. These distinctions matter when markets become stressed. ETF flows can deepen liquidity but can also magnify volatility when sentiment reverses abruptly.

Taken together, these developments reveal a market that has matured in some respects while remaining vulnerable in others. The political environment is friendlier, institutional infrastructure has improved, and the industry now occupies a more secure place within the public financial imagination. Yet the behavior of prices over the past year indicates that crypto still relies heavily on momentum and the pursuit of extraordinary returns.

The very forces that drove Bitcoin’s ascent this year also enabled its sudden decline. As long as sentiment remains the primary engine of market direction, investors should expect cycles of exuberance and retrenchment to continue.

What Comes Next

It is tempting to view the past year as the moment when digital assets finally broke from their old cycles, yet the evidence points in a different direction. Rather than behaving like an emerging store of value or a counterweight to economic stress, crypto has increasingly moved in step with the rhythm of high beta equities. Its rallies have been strongest when liquidity was abundant and risk sentiment was elevated, and its downturns have been most severe when macro conditions tightened. The pattern resembles the behavior of a speculative growth stock rather than an asset with defensive qualities, underscoring how far the market still is from achieving the stability its advocates often claim.

This alignment with broader risk markets helps explain why the industry’s structural vulnerabilities remain so visible. A more reliable pricing framework, one grounded in verifiable reserves, and transparent market structure, would go a long way toward reducing these pressures. If matched with legitimate and recurring use cases that extend beyond trading and speculation, the resulting foundation could strengthen crypto’s claim to durability and soften the extreme swings that continue to define the asset class.

One year ago, we noted that the industry stood at crossroads. That remains the case today, perhaps even more clearly, which is one of the structural reasons The Milwaukee Company, of which TMC Research is an affiliate, has refrained from allocating to digital assets. While the Trump era has created openings for digital assets, it has also revealed that political support cannot counteract the force of economic cycles. The question now is whether the industry can mature into something more resilient or whether it will continue to behave like a high beta vehicle that rises quickly in good times and falls just as fast when the environment shifts. The answer will depend on whether crypto can finally build the transparency, governance, and real world utility that would allow it to evolve from a speculative instrument into a lasting component of the financial system.