Federal Reserve Governor Christopher Waller said the initial optimism that lifted cryptocurrency markets following President Donald Trump’s election appears to be fading as the sector experiences a significant selloff.
"Some of the euphoria that came into the crypto world with the current administration, some of that’s kind of fading," Waller said Monday at a conference in La Jolla, California, hosted by the Global Interdependence Center.
Waller noted that volatility is common in cryptocurrency markets, with major crashes being a normal occurrence. "Crypto dips have happened before," he said, adding that Bitcoin’s current valuation would have seemed extraordinary in earlier years. "Years ago, if you said Bitcoin was $10,000, you’d say — oh my god, this is crazy."
The Fed governor suggested the recent market turbulence could be attributed to regulatory uncertainty and risk management decisions by larger financial institutions.
"I think there was a lot of selloff just because firms that got into it from the mainstream finance had to adjust their risk positions, sell, lots of other things," Waller explained.
The cryptocurrency market is currently experiencing what some describe as the most dramatic correction since the 2022 "crypto winter." Bitcoin has fallen from its late 2025 highs to the $60,000-$70,000 range in early February 2026.
This downturn has affected crypto-related stocks, with Strategy Inc dropping 13.4%, Coinbase Global Inc falling 31%, and Marathon Digital Holdings Inc declining 20.8% over the past month.
Waller’s remarks highlight how cryptocurrency markets are becoming increasingly interconnected with the broader financial system. While digital assets were traditionally viewed as fringe investments primarily driven by retail traders, the sector’s growing exposure to institutional balance sheets through hedge funds, trading desks, and exchange-traded funds has raised its profile among policymakers.
