Federal Reserve Governor Christopher Waller indicated that the optimism which drove the cryptocurrency market higher following the election of President Donald Trump may now be fading as a wave of selling hits the sector.

Speaking at a conference organized by the Global Interdependence Center in La Jolla, California, on Monday, Waller noted that some of the fervor that emerged in the crypto world with the new administration is starting to subside.

The Fed official stated that fluctuations in the cryptocurrency market are common, and recent volatility may be driven by regulatory uncertainty and actions taken by large financial firms for risk management purposes.

He suggested that a significant portion of the selling pressure stems from companies that entered the crypto space from mainstream finance and are now adjusting their risk exposures, alongside other contributing factors.

Waller's comments underscore the increasing entanglement of the cryptocurrency market with the broader financial system. While policymakers have traditionally viewed digital assets as a niche or retail-driven sector, the industry's growing presence on institutional balance sheets—through hedge funds, trading desks, and exchange-traded funds—has raised its profile in policy circles.

Bitcoin has fallen more than 40% from its October peak, forming part of a broader digital asset pullback. Last week, Bitcoin dropped sharply to $60,033, its lowest level since October 2024, triggering the largest spike in volatility since the collapse of crypto exchange FTX in 2022.