Through Wall Street-approved funds, many retail investors flocked into the cryptocurrency haven promised by the Trump administration, only to now face the market's harsh realities. Exchange-traded funds (ETFs) tied to Bitcoin and a host of later alternative coins have collapsed, erasing all gains made ahead of Donald Trump's return to the White House and wiping out the speculative premium that characterized the digital asset frenzy during that period.

Despite Trump's pledge to make the U.S. the world's cryptocurrency capital, Bitcoin has fallen 50% from its peak to around $63,000. Other cryptocurrencies have performed even worse, with an index tracking 50 smaller tokens down 67% from its recent high in October. Overall, the market has lost at least $700 billion in value over the past week.

This downturn marks a sharp reversal for an asset class that Trump vowed to elevate as a national infrastructure priority. Driven by a pro-digital asset agenda from the White House, regulators paved the way for a wave of exchange-traded products. Asset managers quickly seized the opportunity, launching funds linked not only to established tokens but also to riskier ones, packaging them into easily tradable ETFs covering speculative strategies and thematic bets.

For retail investors, however, the arrival of institutional support has so far brought more pain than protection. "Having a crypto-friendly government doesn’t magically eliminate downside volatility. Any investors who expected that are paying an expensive lesson to figure that out," said Nate Geraci, President of NovaDius Wealth Management. "Like many other asset classes, cryptocurrencies are prone to significant declines — something neither the White House nor regulators can prevent."