Cryptocurrency traders are bullish again, anticipating bitcoin (BTC) to break record levels amid volatile trading as pro-crypto president-elect Donald Trump’s January 20 inauguration approaches.
The price of bitcoin, the largest cryptocurrency, has risen 11% from Monday’s lows below $90,000. It has risen nearly 3% in the past 24 hours, topping $100,000 at one point, CoinDesk data shows.
The move into six figures that spurred risk-taking in the broader market came after a weaker-than-expected core CPI report, which eased hawkish Fed fears that had driven prices down. Instead, markets are focusing on Trump’s swearing-in and a possible pro-cryptocurrency announcement on the first day of his term.
“The removal of inflation fears clears the way for Bitcoin to break through the strong $100,000 resistance level ahead of Trump’s inauguration,” Matt Mena, cryptocurrency research strategist at 21Shares, said in an email. “Such a milestone would not only be psychologically significant but also technically significant, allowing Bitcoin to surpass its all-time high of $108,000 and set new record levels as market optimism increases.” 21Shares is one of the world’s largest crypto-native issuers of exchange-traded products (ETPs).
“Trump’s well-documented support for pro-growth policies and his history of favoring asset price appreciation further reinforces the bullish outlook for bitcoin and risk assets in general,” Mena wrote.
The bullish forecast is consistent with a rally in traditional assets, especially the Nasdaq 100, which rose more than 2% on Wednesday. BTC has recently strengthened its positive correlation with the high-tech index to a two-year high.
Meanwhile, the rally in the dollar index, which measures its value against major fiat currencies, has stalled, offering a lifeline to risk assets, and the S&P 500 has approached the key 6,000 level.
According to Mena, a break above 6,000 “could set the stage for the next leg of the global asset bull market.”
Trump, once a skeptic of digital assets, courted the crypto community in the months leading up to the November election, promising to create a national strategic reserve of bitcoins. His victory helped boost BTC to over $108,000 from $70,000 to over $108,000.
“If Trump indicates on day one that he will create the Bitcoin Strategic Reserve, even if he does not sign it on day one, price discovery is expected to be asymmetric,” Nathan Cox, chief investment officer at Two Prime, said in an email. . “Once past the previous highs of $108,000, there is no limit to how quickly it could expand given the unparalleled demand a bitcoin reserve strategy could have globally.”
Two Prime is an SEC-regulated registered investment advisor specializing in digital asset derivatives.
Probably volatility
Paul Howard, senior director at crypto market making firm Wincent, said expected announcements related to digital asset industry regulation, banking rules and the creation of the strategic bitcoin reserve are not yet fully priced in.
“We are positioned for a volatile week ahead with the change of administration in the US and expect to see some +/-10% moves in major companies such as BTC, SOL, ETH and XRP. Prices will reflect the results of President’s announcements, so the opportunities, probably not all, are built into the current price,” Howard said.
