- Trump’s tariffs triggered increased market volatility, affecting Bitcoin and altcoins.
- SEC leadership changes boosted institutional interest in crypto assets like XRP.
The cryptocurrency market demonstrated substantial changes in the first quarter of 2025 because of political decisions and new regulatory actions. Bitcoin maintained stable market depth, while a significant drop in liquidity affected altcoins.
President Trump’s new tariffs, together with provisions from the SEC’s new directorship, created market instability through rising volatility. According to data from Kaiko, these events reshaped trading volumes and market sentiment in Q1.
Trump’s Tariffs and Increased Volatility
Trump’s new tariff announcements, including crypto, added uncertainty to the global markets. As a result, volatility went through the roof, and Bitcoin dropped 12% in Q1 2025, its worst quarter since 2018. This was after Bitcoin had hit new highs in January.
Source: TradingView
Despite the selloff, Bitcoin outperformed altcoins, especially AI and meme coins, which lost an average of 50%. Kaiko’s market depth data showed that Bitcoin’s liquidity increased due to US-based exchanges like CEX.IO, Kraken and Coinbase which supported its market strength.
Market volatility also showed up in the options markets, where the most significant short-term implied volatility since early 2024 was recorded. Traders adjusted their risk after the tariff announcements, and calls were favored. So, while there was a lot of concern in the market, investor sentiment wasn’t completely broken.
Trading Volumes Down Amid Risk Off
After the tariff-induced volatility, crypto trading volumes went down. Kaiko’s data showed weekly trading volumes for Bitcoin, Ethereum, and the top 10 altcoins were down 30% from pre-election levels, averaging $266 billion in Q1 2025. That’s down from the $400 billion daily trading volumes in November 2024.
Offshore exchanges were hit hard as risk-averse traders pulled back due to the uncertainty. As altcoins were volatile, Bitcoin’s volatility went from 34% in February to 51% in March, according to Kaiko. Despite this increase, Bitcoin’s volatility was lower than during last year’s carry trade unwind.
SEC Leadership Change Boosts Market Sentiment
In addition, the U.S. Securities and Exchange Commission (SEC) also played a significant role in Q1. Under new leadership, the SEC dropped six major lawsuits against Binance, Uniswap Labs and Kraken. This crucial regulatory shift helped ease some of the crypto legal uncertainty.
According to Kaiko, this change in regulatory posture boosted market sentiment as traders and institutions became more optimistic about crypto. This optimism was reflected in a surge of spot crypto ETF applications, with XRP being the most popular asset. Kaiko’s data showed that asset managers quickly took advantage of Gary Gensler’s departure in January and submitted many ETF applications, with XRP leading the way.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
