Bitcoin has fallen to a low of $92,508 on January 8 after previously hitting $102,357 on Monday, marking a nearly 10% retracement in a few days. The immediate catalyst is likely to be the January 7 spike in US Treasury yields, with the 10-year rate hitting 4.67% after an unexpectedly strong ISM Price Index and higher JOLTS job openings than expected.
Why the Trump Inauguration is Bullish for Bitcoin
While these data points renewed concerns that inflation may continue, many knowledgeable observers maintain that the upcoming Trump inauguration is a reason to remain optimistic on Bitcoin and crypto . The analysts from LondonCryptoClub (@LDNCryptoClub) argue that “everyone overestimates both liability of tariffs or at least the amount,” indicating that during Trump's previous tenure, there was no “material inflationary impact” despite high-profile tariff announcements.
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According to the analyst, there is a risk that market participants will overlook the fact that “the US also has to refinance more than $7trn in debt this year,” which Raoul Pal, founder of Global Macro Investor, echoed this sentiment by saying, “I tend to agree with the sentiment. this.”
I tend to agree with this opinion https://t.co/SzmHbyXoBc
— Raoul Pal (@RaoulGMI) January 8, 2025
Supporters of the pro-Bitcoin thesis point out that any tariffs introduced under the new Trump administration could be politically significant but largely moderate, echoing LondonCryptoClub's view that “Trump is go big as a negotiating tactic and may deliver much less. ” Another focal point is the emerging liquidity situation that has strengthened risk assets in the past.
LondonCryptoClub sees the Fed finally “starting to flood the market with liquidity,” especially as the Reverse Repo Facility has been rapidly depleted and the temporary relief that could be offered by the debt ceiling. The same argument extends to a new wave of “Global deflation led by China,” which could pressure the United States into rate cuts if growth shows signs of stalling.
Chris Burniske, a partner at Placeholder VC, said it once was accept it the market would rally right into the setup and then sell off, but he now expects a different scenario: “” Agree with this – in Q4 we thought we would rallying into the setup and selling after that, but once that grew before consensus view + DXY & rally levels, it looks like we're moving to previous pain, Valhalla from after that – he preferred the this situation tbh”
Some analysts see benefits only if Trump starts talking publicly about crypto again, as it could raise the profile of Bitcoin. Crypto analyst Gammichan reminded his followers that “we have a president who regularly mentions Bitcoin” and stressed that a strong dollar could be “fuel to pump us when we fall e. “
Gammichan also emphasized that “3-5% inflation is excellent for BTC” and noted that while the Fed may keep rates high for now, it could “juice it at any time” that the government's own interest costs are still uncomfortably large, with trillions in debt. to manage This angle is further strengthened by talk that other global players, especially China, may continue to stimulate their economies, thus strengthening overall liquidity.
We seem to have forgotten:
-We have a president who mentions Bitcoin regularly
– MSTR is in the NASDAQ
-The Fed is in a good position with room to absorb at any time
-3-5% inflation is excellent for BTC
-Strong DXY means to pump fuel for us when it falls
– The Fed needs to get…— Gammichan (@gammichan) January 8, 2025
Felix Jauvin, host of the Forward Guide podcast, an understatement the broader shift in market psychology by saying, “We are rapidly going from 'sell the news', to 'buy the news' on to possess.”
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Despite this generally strong narrative, short-term challenges remain. Recent economic data in the United States has surprised the upside, fueling concerns that the Federal Reserve may keep policy tighter for longer. Some investors see the next few weeks as a tug of war between rising yields and expectations of renewed global easing.
However, LondonCryptoClub argues that the jump in yields could be a temporary blip and once the Fed recognizes the need for refinancing, it will be forced to “help with to keep rates low” and eventually return to “a sort of 'QE not QE. '” if the repo market is showing signs of stress. Those who believe in the “buy the news” thesis expect that as soon as the Fed's liquidity taps open, the price of Bitcoin will likely bounce back from the current slump and it will probably continue higher through 2025.
Market watchers remember how, during the earlier Trump presidencyThe US dollar gained first but quickly rose. LondonCryptoClub noted that “The market took a hit like this the last time Trump was elected and the dollar quickly took off,” suggesting that a similar scenario could be playing out again, as the dollar rallying shortly before weakening.
Coupled with the possibility of coordinated stimulus from major central banks, any sustained reversal in the dollar would likely be good news for Bitcoin and the crypto market in general.
At press time, BTC was trading at $93,596.
Featured image created by DALL.E, a chart from TradingView.com
