Federal Reserve Signals Cooling Crypto Euphoria

On February 9, 2026, Federal Reserve Governor Christopher Waller delivered pointed remarks at the Global Interdependence Center conference in La Jolla, California, signaling a shift in sentiment around cryptocurrency markets.

Waller observed:

“Some of the euphoria that came into the crypto world with the current administration, some of that’s kind of fading.”

His comments come as Bitcoin and major altcoins have retreated significantly from late-2025 peaks, with BTC trading in the $60,000–$70,000 range in early February 2026 — a sharp correction from post-election highs. The remarks reflect broader market dynamics and tempered expectations following Donald Trump’s return to the White House.

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Post-Election Hype Meets Reality

Trump’s election victory in late 2024 sparked widespread optimism in the crypto sector. Supporters anticipated a pro-crypto administration that would deliver lighter regulation, faster legislation (such as the long-discussed market structure “Clarity Act”), and greater institutional embrace of digital assets.

The initial surge pushed Bitcoin well above previous all-time highs and lifted the total crypto market cap dramatically. Memecoins, DeFi tokens, and layer-1 projects all benefited from the narrative of a crypto-friendly White House.

However, Waller highlighted that this early enthusiasm is cooling. He pointed to several contributing factors:

• Regulatory uncertainty persists — Despite campaign promises, comprehensive crypto legislation has not materialized quickly. Waller specifically noted that “the lack of passing of the Clarity Act has kind of put people off,” leaving market structure questions unresolved.
• Institutional risk management — As traditional finance (TradFi) firms increased exposure to crypto under the more permissive political environment, many have now adjusted positions. Larger players are rebalancing portfolios and selling assets to manage risk amid volatility.
• Normal market behavior — Waller emphasized that sharp selloffs and corrections are inherent to crypto, describing recent dips as “part of the game” rather than a sign of systemic failure.

Importantly, Waller downplayed any threat to the broader financial system from crypto volatility. He reiterated that Bitcoin crashes and price swings remain isolated from traditional banking stability — a view consistent with prior Fed statements.

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Implications for the Crypto Market

Waller’s comments arrive at a pivotal moment:

• Market maturity — Crypto is increasingly intertwined with TradFi through ETFs, custody solutions, and institutional allocations. This integration brings stability but also exposes the sector to traditional risk-management pressures.
• Legislative realism — The absence of swift regulatory clarity has disappointed some investors who expected rapid transformation under Trump.
• Volatility as a feature — The Fed governor’s acknowledgment that price swings are normal may reassure long-term holders while reminding speculators that hype alone cannot sustain rallies.

While crypto remains far from disappearing — Waller noted “it doesn’t look like it’s going anywhere anytime soon” — the post-election “Trump premium” appears to be unwinding.

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Looking Ahead

Waller’s speech also touched on other Fed topics, including the ongoing debate over “skinny” master accounts for non-bank payment firms. Yet his crypto remarks stand out as one of the clearest signals yet that the initial political tailwind may be weakening.

For investors, the message is clear: enthusiasm must be tempered with realism. Regulatory progress, institutional flows, and macroeconomic conditions — not just political narratives — will ultimately drive the next leg of the market cycle.

As always in crypto, volatility is the price of participation. The question now is whether the sector can mature beyond election-driven hype and build sustainable growth on fundamentals.