Yesterday evening, Bitcoin’s price soared to $105,877.05 USD just before 9 PM, putting it within striking distance of a new all-time high (ATH). This impressive rally came as markets reacted positively to speculation surrounding the return of Donald Trump to the presidency. The critical question remains: what’s next for Bitcoin?
Earlier this week, Bitcoin traded below $90,000 USD. However, as speculation about Trump’s policy priorities grew, the cryptocurrency began a remarkable upward climb. Analysts believe the market is pricing in the possibility of favorable developments, including regulatory clarity and pro-crypto initiatives. Many expect Trump’s first day in office to bring executive orders highlighting cryptocurrency as a national priority.
The Weekly Price Chart and Market Sentiment
A closer look at Bitcoin’s hourly price chart for the week shows a clear uptrend, starting from the sub-$90,000 range. This rally has been fueled by increasing optimism and speculation about potential regulatory reforms. If market sentiment holds steady, Bitcoin might be on the cusp of testing new resistance levels.
Not everyone, however, predicts immediate action. Anastasia Plotnikova, co-founder and CEO of Fideum, suggests significant policy changes could take weeks or months to materialize. “Legislative reforms take time,” she stated. “However, a positive statement from the administration on cryptocurrency could provide a short-term boost.”
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Changes at the Securities and Exchange Commission (SEC)
One of the most talked-about aspects of Trump’s return is the reshuffling of leadership at the SEC. Current SEC Chairman Gary Gensler announced his resignation two weeks ago, effective on inauguration day. Additionally, Jaime Lizárraga, another commissioner, stepped down citing personal reasons. These changes leave the SEC with only three active members: Hester M. Peirce, Caroline A. Crenshaw, and Mark T. Uyeda. However, Crenshaw’s term officially ended in June 2024, though she can serve until the end of 2025 if no replacement is confirmed.
Trump has already nominated Paul Atkins as the next SEC chairman. If confirmed by the Senate, Atkins is expected to usher in a more crypto-friendly regulatory approach. However, the timeline for his confirmation remains uncertain.
Spot Bitcoin ETFs See Renewed Momentum
The excitement surrounding potential regulatory shifts has spilled over into the market for spot Bitcoin exchange-traded funds (ETFs). After a period of sluggish performance, these ETFs have shown significant gains over the past three days, collectively adding $1.86 billion USD to their market value. Yesterday alone, the net inflow into these funds approached $1 billion USD. Data from prominent funds like ARKB is still pending, meaning the total gains could be even higher.
Market Expectations for Trump’s First Day
Speculation is rife about Trump’s potential actions on his first day back in office. While some anticipate groundbreaking announcements, such as the introduction of Bitcoin as a national reserve asset, others urge caution.
Legal experts argue that comprehensive legislative proposals, like Senator Cynthia Lummis’s bill advocating Bitcoin as a state reserve, could take 10 to 12 months to pass—assuming they don’t face significant opposition. Such initiatives would require sustained political and public support, alongside robust economic rationale.
In the short term, Trump may focus on symbolic gestures or policy statements that underscore his administration’s commitment to fostering innovation in the cryptocurrency space. A minor push in this direction could potentially propel Bitcoin to new ATHs. However, breaching the $200,000 USD milestone would require a monumental influx of capital, potentially exceeding $2 trillion USD in additional market value. Such growth would make Bitcoin the second-largest global asset, overtaking companies like Apple.
What Lies Ahead?
The Bitcoin market is currently experiencing a wave of enthusiasm fueled by speculation about political and macroeconomic shifts. However, this excitement is not without risks. As we analyze the current trends, it’s crucial to understand that much of the recent rally is driven by emotion, a factor that often leads to volatile price swings.
Technical analysts are focusing on key support and resistance levels to provide a clearer picture of Bitcoin’s potential trajectory. The four-hour chart highlights critical resistance zones at $106,921 USD (141.4% Fibonacci level) and $109,243 USD (161.8% Fibonacci level). Conversely, strong support levels near $90,000 USD remain a safety net if a correction occurs.
Broader market conditions also play a role. Recent data shows increased activity in Bitcoin spot ETFs, indicating renewed interest from institutional investors. This surge in trading volume suggests optimism but also raises the possibility of a short-term correction, especially if expectations surrounding regulatory changes are not met.
Balancing Optimism with Caution
It’s essential to recognize that market sentiment can shift rapidly. The inauguration of a new president often brings a mix of hope and uncertainty. While Trump’s administration may signal a more favorable stance on cryptocurrency, concrete actions—such as the potential adoption of Bitcoin as a strategic reserve asset—are unlikely to materialize in the short term. Legislative processes take time, and overestimating their immediate impact could lead to unrealistic market expectations.
Furthermore, indicators like the Relative Strength Index (RSI) on weekly charts suggest a bearish divergence, warning of potential downward pressure. Analysts recommend monitoring the Fear and Greed Index, which has recently climbed back into the “extreme greed” territory, a sign that the market may be overheating.
Preparing for Market Movements
Monday’s inauguration could be a pivotal event for Bitcoin, potentially acting as a “sell the news” scenario if market expectations are not met. Investors should brace for heightened volatility and consider both bullish and bearish scenarios. For instance, a failure to sustain momentum above $105,000 USD might lead to a pullback towards key support levels around $90,000 USD. Conversely, breaking through $110,000 USD could pave the way for a new rally.
In the coming days, traders and investors should focus on risk management and avoid letting emotions dictate their decisions. Market dynamics are complex, and while the long-term outlook for Bitcoin remains positive, short-term fluctuations are inevitable.
Stay tuned for our in-depth Sunday analysis, where we’ll delve deeper into technical indicators and explore potential scenarios for Bitcoin’s price action.
