As the countdown to the inauguration of President-elect Donald Trump begins, crypto traders are filled with renewed optimism, anticipating that Bitcoin (BTC) will not only maintain its momentum but could potentially surpass its record highs. Recent trading activity has reflected this enthusiasm, with Bitcoin, the leading cryptocurrency, experiencing an impressive recovery.
Since dipping under $90,000 earlier this week, Bitcoin’s price has surged by 11%, crossing the $100,000 threshold at its peak, according to CoinDesk data. This notable increase is partly attributed to the recent core CPI report, which eased inflation concerns and allowed market participants to redirect their focus towards Trump’s inauguration and the potential for a pro-crypto declaration.
Matt Mena, a crypto research strategist at 21Shares, expressed that “the removal of inflation fears clears the way for Bitcoin to break through the strong $100,000 resistance level before Trump’s inauguration.” He emphasized that achieving this significant milestone could not only bear psychological impact but also set the stage for Bitcoin to exceed its all-time high of $108,000 amid growing market optimism. 21Shares stands as one of the foremost issuers of crypto-native exchange-traded products (ETPs) worldwide.
The anticipation surrounding Trump’s inaugural address, where pro-growth policies and asset appreciation will likely be highlighted, has coincided with a broader rally in traditional assets. Notably, the Nasdaq 100 index soared by over 2% Wednesday, and Bitcoin’s correlation with this tech-heavy index has reached its highest level in two years.
Furthermore, the dollar index, which measures the dollar’s value against major world currencies, has shown signs of stagnation, benefiting risk assets as the S&P 500 approaches the critical milestone of 6,000. Mena suggests that a breakthrough above 6,000 could launch a new phase in the global asset bull market.
Trump’s relationship with cryptocurrency has evolved significantly, having transitioned from skepticism to actively courting the crypto community leading to his election in November. Notably, he proposed the establishment of a national strategic Bitcoin stockpile, a move that previously propelled Bitcoin from $70,000 to over $108,000.
Nathan Cox, chief investment officer at Two Prime, highlighted the potential volatility in the market, stating that if Trump announces the creation of the Strategic Bitcoin Reserve on his first day, the price dynamics could shift dramatically. “Once through the previous highs of $108,000, there is no telling how quickly it could expand, given the unparalleled global demand for a Bitcoin reserve strategy,” he noted.
Anticipated Market Volatility
With the impending administration change in the U.S., Paul Howard of crypto market-making firm Wincent warned that upcoming announcements regarding digital asset regulations and banking rules might not be fully factored into current prices. “We expect a volatile week ahead, with potential fluctuations of around +/-10% across major cryptocurrencies such as BTC, SOL, ETH, and XRP. Pricing will reflect the outcomes of the new President’s announcements, creating both challenges and opportunities in the marketplace,” Howard stated.
