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Hi. Eric here.

Crypto sentiment has hit a new rock bottom.

Signals that investors are losing faith are coming hard and fast as the market trades at $2 trillion, or 44%, below its October record.

Google searches for “is Bitcoin dead” have surged since the start of the year (and it had topped in December), and analysts bet Bitcoin’s price will fall another 85% to $10,000.

Elsewhere, the Bitcoin Fear and Greed Index has slumped to levels not seen since 2019, and traders have pulled over $10 billion out of Bitcoin and Ethereum exchange-traded funds since October, according to DefiLlama data.

Investors have reason to be hesitant.

Despite Donald Trump leaning heavily on the Federal Reserve, interest rate traders are betting that the US central bank won’t cut interest rates before June.

The sentiment is further fuelled by the fact that stock markets and assets like gold are hitting new heights.

The problem with that, as Wolfgang Münchau, director of Eurointelligence, points out in his latest column for DL News, is that Bitcoin is struggling to find a narrative.

If it’s a tech asset, it would’ve rallied alongside tech stocks. If it were a safe-haven asset, it would’ve soared when gold did.

This, however, could change, Münchau said.

Trump has nominated Kevin Warsh to lead the Federal Reserve when Jerome Powell’s term as chair comes to an end this summer.

Not only is Warsh — if confirmed — expected to follow the White House’s lead and lower interest rates, but Münchau suggests he may also help push Bitcoin into the central bank’s official reserves.

“The lack of reserve asset status is what distinguishes Bitcoin from gold at this point —and it is the reason why the political uncertainty recently has been benefiting gold relatively more than Bitcoin,” Münchau said.

To be sure, not everyone shares the market’s bearish sentiment.

Perennial pumpers like Arthur Hayes, Tom Lee and Michael Saylor — the last two of which have seen their digital asset treasury firms take on brutal beatings from the market — continue to wax lyrical about cryptocurrencies’ incoming rallies.

And, to be fair, the first year of the second Trump presidency laid the groundwork for blockchain-based businesses to triumph.

The Oval Office has supported pro-crypto bills and executive orders, ended regulators’ crackdown on crypto, and pardoned influential industry insiders.

This week, the Trump-linked crypto project World Liberty Financial even hosted both crypto company CEOs and top dogs at financial giants like Goldman Sachs — all of whom sang the praises of the industry.

Even so, things still look grim at the moment.

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