For months, crypto-loving investors sank billions into leveraged strategies with the hope that Donald Trump would eliminate regulations on their upstart industry and usher in a new world of digital prosperity.

Now, day traders who bet on cryptocurrencies are bearing the the brunt of a sweeping Wall Street selloff — one driven by fears about Trump’s volatility-inducing policy agenda. Digital assets have been faring particularly poorly, in part due to disappointment that Trump’s industry policies are not living up to expectations.

Just look at a cohort of exchange-traded funds that seek to offer juiced-up returns on various virtual currencies or crypto-linked themes. Among the biggest losers on Monday were two ETFs that offer leveraged bets on Strategy — the Bitcoin-holding company formerly known as MicroStrategy — both of which were down more than 30% for the day.

Another fund that doubles the daily returns of Robinhood Markets Inc. — a favorite brokerage of crypto traders — dropped 40%. Leveraged-up Bitcoin funds lost roughly 20% and those focused on Ether declined 26% amid a wider selloff in the digital-tokens market.

The assets and companies underpinning the leveraged funds can be seen as forming the crux of a crypto-trading complex that had been turbocharged in the wake of Trump’s return to the White House. The president has embraced the digital-asset industry, promising a strategic reserve filled with tokens and kindling speculative spirits with the launch of his own memecoin. Bitcoin and other cryptocurrencies soared after the election.

Now, though, industry insiders are growing concerned about the Trump administration’s actions thus far on cryptocurrencies. Recent news of a strategic cryptoreserve was met with dismay after the president said lesser-known tokens XRP, SOL and ADA would be included. Then a White House crypto summit last Friday “turned out to be a textbook PR exercise — big on optics, light on substance,” wrote Donovan Choy and Macauley Peterson at Blockworks. “We’re still very much in wait-and-see mode.”

The ETFs are also suffering steep losses as investors — startled by Trump’s on-again-off-again trade threats, and Elon Musk’s culling of the federal workforce — are tallying up the growing list of recessionary signals. The S&P 500 has shed all the gains since the election, and speculative names that were part of the “Trump trade” are going down even faster.

A growing number of economists are ringing the alarm bells about a potential recession. At the start of the month, a model from JPMorgan Chase & Co. showed that the market-implied probability of an economic downturn had climbed to 31%, while a similar model from Goldman Sachs Group Inc. also suggested that the risk of a recession is edging up. In such an environment, “you are not going to want too much exposure to high-beta names such as these” leveraged ETFs, said Todd Sohn, senior ETF strategist at Strategas.

The president has himself suggested that the current market turbulence may be part of a necessary “transition” period as his new policies work their way through the economy. In that context, it’s understandable that speculative names are “being aggressively unwound,” said Michael O’Rourke, chief market strategist at JonesTrading.

“These are levered wagers, literal gambling on the most speculative aspects of the equity market,” he said. “The way they rose sharply should have indicated they can collapse just as quickly, if not even faster.”

The two leveraged funds based on the company formerly known as MicroStrategy are down about 45% so far this year. The GraniteShares 2x Long COIN Daily ETF (ticker CONL), which seeks to offer 200% of the daily performance of Coinbase Global Inc., the crypto exchange, has declined more than 55% since the end of 2024. And a double levered Bitcoin fund, which trades under the ticker BITX, has lost 35% as the token itself has dropped 16%.

Bitcoin sank to a four-month low of $76,606 on Tuesday morning in Singapore before paring losses.

The $50 billion iShares Bitcoin Trust ETF (IBIT) saw its largest weekly inflow at the start of December, when more than $2.6 billion came in, according to data compiled by Bloomberg. February, on the other hand, marked the fund’s first and biggest month of outflows with nearly $800 million coming out. Another $130 million has been yanked so far in March.

Also cratering: High-octane tech ETFs and funds linked to Musk — once seen as slam-dunk trades among the retail crowd given the tech billionaire’s proximity to the White House. The Direxion Daily TSLA Bull 2X Shares (TSLL), which rides Tesla’s famous volatility, is down more than 70% this year amid a drubbing for shares of the EV maker. And funds looking to give twice the returns of Palantir Technologies Inc. sported losses of around 20% on Monday alone.

Perhaps no other fund encompasses the idea of the crypto-and-Musk-complex as well as Cathie Wood’s ARK Innovation ETF (ARKK), given her proclaimed fondness for innovative technologies. The fund has lost 16% year to date. And investors have pulled about $240 million from it, which comes after two straight years of outflows totaling almost $4 billion. ARKK’s top holdings include Musk’s Tesla, as well as shares of Coinbase, Robinhood and Palantir.

“There are plenty of long-term growth drivers for crypto especially with the pro-crypto administration. But the issue is that crypto is still a high-risk asset where much of its pricing is built on sentiment rather than rationality,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. “And it’s hard to have faith in crypto when there are so many concerns across the broader market.”