"Ultimately this set up digital assets to be more at risk of a sharp sell-off whether the driver of the sell-off came from digital assets or not (in this case Nasdaq)," Kendrick said of the market's initial reaction to the order. "Nevertheless, at least the Trump administration news is out there, so the disappointment/confusion and therefore 'hope phase' is over."
Investors may also be derisking ahead of this week's Federal Reserve meeting, which is scheduled to conclude Wednesday.
"Investors are hoping the Fed will lean more to the accommodative side but are fearful the Fed won't be as dovish as what the market would like to see," said Joel Kruger, market strategist at LMAX. "The most important takeaway right now is to see the forest through the trees. When we look at the bitcoin chart, there is nothing bearish about the price action."