“Wednesday’s soft U.S. core CPI has opened doors for traders to focus on Trump’s swearing in and the possibility of first-day pro-crypto announcement.”, — write: www.coindesk.com
The price of bitcoin, the biggest cryptocurrency, has risen 11% from Monday’s lows under $90,000. It has jumped nearly 3% in the past 24 hours, topping $100,000 at one point, CoinDesk data show.
The move into the six figures that spurred risk-taking in the broader market followed a softer-than-expected core CPI report, which alleviated hawkish Fed fears that had driven prices lower. Instead, markets are focusing on Trump’s swearing-in and a potential pro-crypto announcement on the first day of the office.
“The removal of inflation fears clears the way for bitcoin to break through the strong $100,000 resistance level before Trump’s inauguration,” said Matt Mena, a crypto research strategist at 21Shares, in an email. “Such a milestone would not only be psychologically significant but also technical, setting up bitcoin to surpass its $108,000 all-time high and establish new record levels as market optimism builds.” 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 track record of favoring asset price appreciation further reinforces the bullish outlook for bitcoin and risk assets more broadly,” Mena wrote.
The bullish forecast is consistent with a rally in traditional assets, especially the Nasdaq 100, which surged over 2% Wednesday. BTC has recently strengthened its positive correlation with the tech-heavy index to a two-year high.
Meanwhile, the rally in the dollar index, which gauges the greenback’s value against major fiat currencies, has stalled, offering a lifeline to risk assets, and the S&P 500 has neared the key level of 6,000.
According to Mena, a break above 6,000 “could set the stage for the next leg of the global asset bull market.”
Once a skeptic of digital assets, Trump courted the crypto community in months leading up to the November election, pledging to create a national strategic bitcoin stockpile. 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 be creating the Strategic Bitcoin Reserve, even if he doesn’t sign it on day one, expect price discovery to be asymmetric,” said Nathan Cox, the chief investment officer at Two Prime, in an email. “Once through the previous highs of $108,000, there is no limit to how fast it could expand given the unparalleled demand a bitcoin reserve strategy could have globally.”
Two Prime is an SEC-regulated registered investment adviser specializing in digital asset derivatives.
Volatility likelyPaul Howard, a senior director at crypto market-making firm Wincent, said expected announcements related to regulating the digital assets industry, banking rules and creation of the strategic bitcoin reserve are not fully priced in yet.
“We are positioned for a volatile week ahead with the change of administration in the U.S. expect to see some +/-10% moves across the majors such as BTC, SOL, ETH, and XRP. Pricing will reflect outcomes of announcements by the incoming President, so opportunities, likely not everything, are baked into the current price,” Howard said.
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