Trump’s National Security Strategy shakes Bitcoin price as market signals risk of inbound crypto winter

Bitcoin’s price trembles at $89,000 after the White House published its National Security Strategy on Friday.

US President Donald Trump’s latest release ramps up the pressure on US allies to spend more on defence, echoing the American leader’s speech to the United Nations at the end of last year.

“The days of the United States propping up the entire world order like Atlas are over,” the National Security Strategy reads. “We count among our many allies and partners dozens of wealthy, sophisticated nations that must assume primary responsibility for their regions and contribute far more to our collective defence.”

While the document doesn’t carry any real legal weight, it adds to market uncertainty that analysts warn risks pushing crypto into bear territory.

Why worry?

There’s a simple reason why crypto traders worry about Trump’s National Security Strategy: It may make it harder for central banks to cut interest rates.

Lower interest rates usually incentivises investors to bet on riskier assets like cryptocurrencies. As a result, lower rates usually translates to Bitcoin’s price surging.

The National Security Strategy is urging NATO members to increase their defence budget from 2% of GDP to 5%. To fund this increase, governments are likely to ramp up their borrowing, which means higher inflation.

Central banks want to keep inflation low and usually delay rate cuts when prices skyrocket as it can exacerbate the situation.

To be sure, market watchers still expect the Federal Reserve to cut interest rates at its December meeting next week.

The Chicago Mercantile Exchange’s FedWatch tool, which aggregates sentiment among analysts, put the chances of an easing at 86%.

Another poll that queried 100 economists also suggests that the majority support a rate cut at the upcoming meeting, according to Reuters.

Polymarket punters put the chances of the US central bank slashing rates next at 94%.

Adds to worry

Even so, the White House’s release adds to a plethora of mounting and miserable market signals.

Bitcoin options are showing that traders are betting that the biggest cryptocurrency won’t recover from its current price range anytime soon, Bloomberg reports.

Traders also yanked $87 million from US spot Bitcoin exchange-traded funds in the first week of December, according to data from DefiLlama. That adds to the almost $3.5 billion pulled from those funds in November, highlighting the souring market sentiment.

The selloff has not only seen Bitcoin trail the returns of the S&P 500 on an annual basis for the first time in more than a decade, but also worsened the situation for digital asset treasuries.

Those companies have bet their companies’ future on the gamble that Bitcoin will always go up. Yet, firms that raised capital to buy Bitcoin over $100,000 — thinking the asset would never drop below six-figures — are now sitting on massive unrealised losses while their equity premiums have simultaneously evaporated.

Bitcoin treasury pioneer Strategy is down roughly 60% since its July high. Nakamoto, another DAT, has seen its share price fall some 95%.

AI and regulatory concerns

Adding to the trepidation, is the daunting prospect that the hype around artificial intelligence is creating a bubble that’s at the risk of bursting.

“Some [stock prices] might be justified, but based on pure quantitative valuation, we’re way too high,” André Dragosch, crypto investment firm Bitwise’s European head of research, said on December 3.

Another concern is that Washington’s momentum to push through crypto laws seems to have ground to a halt.

“My biggest worry is on the regulatory side in the US,” Bitwise’s Chief Invesment Officer Matt Hougan said on December 3. “We still haven’t inked the market structure act, and there are growing worries we won’t before the 2026 elections, meaning some of the regulatory progress could be reversed.”

And then there’s always the fear surrounding Bitcoin’s four-year boom-bust cycle, which has dominated investor sentiment. Gauging from previous cycles, traders worried that 2025 would mark a top, which became a self-fulfilling prophecy.

Bullish signs

On a more optimistic note, Hougan argued that — despite ETF selloffs, the Bitcoin’s price plummeting, and general market woes — there are signs to be bullish.

Vanguard is allowing Bitcoin ETFs on its platform, giving 8 million clients access to the cryptocurrency. Bank of America is allowing advisors to recommend Bitcoin ETFs, unlocking a $3.5 trillion asset pool.

And the Fed is ending quantitative tightening in December, improving liquidity conditions, which tends to favour risk-on assets like Bitcoin.

“The end of year could be very good,” Hougan said. “There’s not much downside left.”