Crypto traders are once again optimistic, expecting bitcoin (BTC) to surpass record highs amid volatile trading ahead of pro-crypto President-elect Donald Trump’s inauguration on January 20.
The price of bitcoin, the largest cryptocurrency, rose 11% from Monday’s low below $90,000. It jumped almost 3% in the past 24 hours, surpassing $100,000 at one point, according to CoinDesk data.
The move to six figures, which boosted risk-taking in the broader market, followed a weaker-than-expected core CPI report that eased hawkish Fed fears that had driven down price. Instead, markets are focused on Trump being sworn in and a possible pro-crypto announcement on his first day in office.
“Removing inflationary fears paves the way for bitcoin to break the strong resistance level of $100,000 ahead of Trump’s inauguration,” Matt Mena, crypto research strategist at 21Shares, said in an email. “Such a step would not only be psychologically significant, but also technical, allowing bitcoin to surpass its all-time high of $108,000 and set new record highs as market optimism strengthens.” 21Shares is one of the largest crypto-native issuers of exchange-traded products (ETPs) in the world.
“Trump’s well-documented support for pro-growth policies and his history of supporting asset price appreciation further strengthen the bullish outlook for Bitcoin and risk assets in general,” Mena wrote.
This bullish forecast is consistent with a rally in traditional assets, notably the Nasdaq 100, which jumped more than 2% on Wednesday. BTC recently strengthened its positive correlation with the tech-heavy index to reach its highest level in two years.
Meanwhile, the rise in the dollar index, which measures the greenback’s value against major fiat currencies, has stalled, providing a lifeline to risky assets, and the S&P 500 has approached from the key level of 6,000.
According to Mena, a break above 6,000 “could pave the way for the next stage of the global asset bull market.”
Once skeptical of digital assets, Trump courted the crypto community in the months leading up to the November election, pledging to create a strategic national stockpile of Bitcoin. His victory helped propel 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 doesn’t sign it on day one, expect price discovery to be asymmetric,” said Nathan Cox, director investments at Two Prime, in an email. “Once it breaks the previous high of $108,000, there is no limit to how quickly it could grow given the unprecedented demand a Bitcoin reserve strategy could have globally .”
Two Prime is an SEC-regulated registered investment advisor specializing in digital asset derivatives.
Likely volatility
Paul Howard, senior director at crypto market-making firm Wincent, said expected announcements regarding digital asset sector regulation, banking rules and the creation of the Bitcoin Strategic Reserve are not yet fully embedded.
“We are positioned for a volatile week ahead with the change of administration in the United States and we anticipate movements of +/- 10% on majors such as BTC, SOL, ETH and XRP. Prices will reflect the results of announcements from the new investors Mr. President, so the opportunities, and probably not all, are priced in today,” Howard said.
