Jan 10, 2025 12:05
Bitcoin has fallen to a low of $92,508 on January 8 after previously hitting $102,357 on Monday, marking almost a 10% retreat in a matter of days. The immediate catalyst appears to be the January 7 spike in US Treasury yields, with the 10-year rate hitting 4.67% following an unexpectedly strong ISM Prices Paid Index and higher-than-anticipated JOLTS job openings. Why The Trump Inauguration Is Bullish For Bitcoin While these data points renewed worries that inflation could persist, many seasoned observers insist the upcoming Trump inauguration is a reason to stay bullish on Bitcoin and crypto. The analysts from LondonCryptoClub (@LDNCryptoClub)argue that everyone is overestimating both the likelihood of tariffs or at least the size, highlighting that when Trump was previously in office, there was no substantial inflationary impact despite high-profile tariff announcements. Related Reading: Anticipating A 2025 Super Cycle: Bitcoin Rallies With Trumps Regulatory Reforms On The Horizon According to the analyst,s market participants risk overlooking the fact that the US has also got to refinance over $7trn in debt this year, which could force the Fed to keep rates lower and eventually end quantitative tightening. Raoul Pal, Founder of Global Macro Investor, echoed this sentiment by saying, I tend to agree with this take. I tend to agree with this take https://t.co/SzmHbyXoBc Raoul Pal (@RaoulGMI) January 8, 2025 Supporters of the pro-Bitcoin thesis point out that any tariffs introduced under a new Trump administration might be politically large but practically modest, echoing the LondonCryptoClub view that Trump goes big as a negotiation tactic and likely delivers much less. Another focal point is the emerging liquidity scenario that has bolstered risk assets in the past. LondonCryptoClub sees the Fed ultimately start to flood the market with liquidity, especially given the swift depletion of the Reverse Repo Facility and the potentially temporary respite offered by the debt ceiling. The same argument extends to a renewed wave of China-led global disinflation, which could pressure the United States into rate cuts if growth shows signs of stalling. Chris Burniske, a partner at Placeholder VC, said he once assumed the market would rally straight into the inauguration and then sell off, but he now foresees another scenario: Agree w this – in Q4 was thinking wed rally into inauguration and sell off after, but once that became too consensus a view + DXY & rates rallying, looks like were shifting to pain before, Valhalla after – prefer this setup tbh Some analysts see direct benefits if Trump starts publicly discussing crypto again, given how it may raise Bitcoins profile. Crypto analyst Gammichan reminded followers that we have a president who will be mentioning Bitcoin regularly and emphasized that a strong dollar could be fuel to pump us when it falls. Gammichan also stressed that 3-5% inflation is excellent for BTC and noted that while the Fed might keep rates high for the moment, it could juice it whenever because the governments own interest expenses remain uncomfortably large, with trillions in debt to manage. This angle is further enhanced by talk that other global players, especially China, may continue to stimulate their economies, thereby boosting overall liquidity. We seem to have forgotten that: -We have a president who will be mentioning Bitcoin regularly -MSTR is in the NASDAQ -Fed is in a great position with room to juice it whenever -3-5% inflation is excellent for BTC -Strong DXY means fuel to pump us when it falls -Fed needs to get Gammichan (@gammichan) January 8, 2025 Felix Jauvin, host of the Forward Guidance podcast, underscored the broader shift in market psychology by stating, Were quickly going from sell the news, to buy the news on inauguration. Related Reading: Bitcoin To Blast Off? Trumps Fury Over Interest Rates Signals Big Move Despite this generally upbeat narrative, short-term challenges remain. Recent economic data in the United States has surprised to the upside, prompting worries that the Federal Reserve might keep policy tighter for longer. Some investors see the next few weeks as a tug of war between rising yields and the prospect of renewed global easing. Still, LondonCryptoClub argues that the jump in yields might be a temporary head fake and that once the Fed recognizes how much refinancing must occur, it will be compelled to help keep rates low and eventually revert to some form of not QE QE if the repo market shows signs of stress. Those who believe in the buy the news thesis anticipate that as soon as the Feds liquidity taps reopen, Bitcoins price will likely rebound from its current slump and possibly continue higher throughout 2025. Market watchers also recall how, during Trumps earlier presidency, the US dollar initially gained but quickly topped out. LondonCryptoClub noted that the market reacted this way last time Trump got elected and quickly the dollar topped out, suggesting that a similar scenario might play out again, with the dollar rallying briefly before weakening. Combined with the possibility of coordinated stimulus from major central banks, any sustained reversal in the dollar would likely spell good news for Bitcoin and the broader crypto market. At press time, BTC traded at $93,596. Featured image created with DALL.E, chart from TradingView.com
World Crypto Global
