Bitcoin crosses $100,000 again: Can Trump’s inauguration spark a new all time high?

Following several tranquil periods, Bitcoin has surpassed the $100,000 threshold once more. The presence of approximately $1.54 billion in call options at $120,000 and renewed interest in cryptocurrency during the Trump era seems to indicate a potential large-scale surge ahead.

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BTC breaches $100,000, again

Once again, Bitcoin (BTC) is back in the limelight. Following a period of stability between $92,000 and $98,000, BTC has broken through the $100,000 barrier, currently trading at approximately $101,700 on January 7th. However, it’s still around 6% below its record high of $108,268.

Increasingly betting on a potential Bitcoin surge, data reveals that traders have significantly increased their holdings of $120,000 call options, amounting to an impressive open interest of approximately $1.56 billion as of January 7th. This indicates a strong belief among traders that the price of Bitcoin could reach unprecedented highs.

A call option represents a contract that allows an individual the privilege, not compulsion, to purchase Bitcoins at a predetermined cost in the future. Essentially, it signifies a wager that the Bitcoin price will increase.

What’s causing all this hopefulness? With President-elect Donald Trump getting ready to assume office soon, there’s buzz that his administration could bring about a more favorable period for cryptocurrencies.

In simpler terms, where does this put Bitcoin’s future trajectory? Let’s delve further into the statistics, analyze public opinion, and examine predictions from experts regarding potential developments in the near term.

What Trump’s inauguration could mean for crypto

With Trump’s inauguration slated for January 20th, this event promises to be pivotal for the digital assets sector, potentially leading to modifications in the regulation of cryptocurrencies within the United States.

Among the imminent changes, we can expect a shift in leadership as Gary Gensler, a divisive figure within the cryptocurrency community due to his firm approach towards digital assets, steps down from his position as the Chair of the Securities and Exchange Commission (SEC).

The Securities and Exchange Commission (SEC) currently follows SAB 121 guidelines, which means that publicly traded banks must categorize their crypto assets as debts on their balance sheets. This classification makes it less financially beneficial for banks to undertake extensive cryptocurrency custody activities on a large scale.

Last year, Congress decided to abolish SAB 121, but this move was overturned when President Biden vetoed it. Should Gensler step down, his departure could trigger significant changes in policy since he is expected to be replaced by Paul Atkins, a former SEC Commissioner who is known for being favorable towards cryptocurrencies.

Currently, Representative French Hill has hinted that the Republican leadership intends to focus on establishing a thorough regulatory structure for cryptocurrencies. This initiative is an expansion upon the FIT 21 bill, which was passed in the House back in 2024, and aimed at resolving the ongoing jurisdictional dispute between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), concerning their authority over cryptocurrencies.

As a researcher studying the recent Financial Innovation and Technology (FIT) Act 21, I must admit that the enthusiasm surrounding this legislation was palpable. However, it’s important to acknowledge that not everyone shares this optimism. Some industry experts have expressed concerns about the bill, claiming it was hastily passed and unduly restrictive, particularly in its handling of decentralized finance.

Leading Republicans are suggesting they might abandon the existing Financial Innovation Token 2021 (FIT 21) program and instead initiate a new one, emphasizing innovation while taking into account issues raised by the Decentralized Finance (DeFi) sector.

However, beyond just the immediate changes in policy, Trump’s inauguration may mark a significant change in attitude. During his campaign, Trump was often referred to as a “crypto candidate,” and there is much anticipation to determine if he will fulfill pledges such as establishing a U.S. Bitcoin reserve or setting up a federal council for cryptocurrencies.

As a researcher studying cryptocurrencies, I recognize that their performance is not independent from broader economic factors. Factors such as current interest rates, inflation statistics, and overall market mood significantly influence how cryptos behave in the upcoming months.

Macroeconomic winds: what this means for Bitcoin

This coming week, several significant economic indicators will help us understand the current state of the U.S. economy. For those involved in cryptocurrencies, these developments warrant careful analysis.

The process begins by examining the ADP National Employment Report for January 8, which reveals the number of new private-sector jobs created in December. Experts predict approximately 130,000 positions – a slight decrease compared to November’s 146,000.

9th January provides another key piece in the puzzle with the release of the weekly jobless claims report. This figure has just reached an eight-month minimum, indicating that employers are retaining staff despite the economic downturn. If these claims continue to decrease, it may bolster market confidence, motivating investors to take on additional risk – potentially leading to increased investment in Bitcoin.

On January 10th, attention will shift towards the US Consumer Confidence Index. This indicator measures the level of optimism people have about the economy and their readiness to spend money. If the index shows strong results, it may encourage investors to take risks, potentially benefiting Bitcoin.

Here’s another angle: Consumers’ feelings about the economy can sometimes indicate their expectations of inflation. When people believe inflation will increase, Bitcoin may gain renewed popularity as a safeguard against decreasing purchasing power. However, this could also lead to the Federal Reserve increasing interest rates to combat inflation, which might limit gains in cryptocurrencies.

As the week concludes, the U.S. will release its employment report and unemployment rate. Financial analysts anticipate that approximately 155,000 new jobs will be added to the economy – a decrease from November’s figure of 227,000. Meanwhile, they predict that the unemployment rate will remain unchanged at 4.2%.

Positive job market statistics tend to boost investor trust and spark enthusiasm for investments in higher-risk assets such as Bitcoin. Conversely, weak employment figures can lead to a more cautious approach, often causing investors to favor safer investment options.

By the end of this month, we can expect a more definitive stance from the Federal Reserve as they release the minutes from their upcoming meeting. These minutes should offer insights into whether the Fed plans to reduce interest rates, or not, by the year 2025.

At present, many financial markets are keeping a keen eye on the Federal Open Market Committee (FOMC) gathering scheduled for January 29th. At this point in time, it’s predicted that there’s only a slight possibility, approximately 9.1%, of the Federal Reserve lowering interest rates by another 0.25%.

Previously, the Federal Reserve reduced interest rates by 25 basis points in December and an additional 50 basis points in September. This reduction in rates introduced more funds into the financial markets, which in turn boosted investments in riskier assets like Bitcoin.

During the December gathering, Fed Chair Jerome Powell adopted a more aggressive stance, indicating that any future reductions in interest rates would largely depend on forthcoming economic statistics. Given that it’s more than 90% probable that the Fed will maintain rates as they are later this month, his current position seems neutral for now.

In the near future, sudden economic changes like unexpected inflation rates or job market figures might cause the Federal Reserve to adjust its course abruptly. This shift could, in turn, influence Bitcoin and the entire cryptocurrency market.

Crypto industry’s rising hopes

The cryptocurrency sector often flourishes based on stories, and the upcoming policies from the Trump administration seem particularly intriguing.

Brad Garlinghouse, CEO of Ripple, recently shared on Twitter that he sees a resurgence of confidence in the United States cryptocurrency industry due to what he calls the “Trump effect.

After navigating regulatory hurdles under Gary Gensler’s SEC for several years, Ripple has gone through a significant transformation. As Brad Garlinghouse mentioned, a majority of Ripple’s job openings (75%) are now located within the United States – a stark contrast to the past when most of their hires were based overseas.

Remarkably, Ripple entered into more U.S. agreements within the six weeks after Trump’s election than they had in the preceding six months, indicating a surge of optimism evident across the industry.

In the meantime, Trump’s choices for crucial positions, such as Scott Bessent as Treasury Secretary and David Sacks leading the new AI and Crypto Division, suggest a forward-thinking approach that may accelerate progress.

From an economic perspective, Hunter Horsley’s theory stirs up even more curiosity. He proposes that the Trump administration could potentially thaw out merger and acquisition deals, which would give big companies the opportunity to strengthen their grip on the market.

If major tech companies such as Amazon or Google continue acquiring smaller competitors, the perception of distrust towards these centralized entities might intensify further.

In a suggestive comment, Horsley pointed out that due to its nature as a challenger to conventional systems, Cryptocurrency might particularly profit from the upcoming trend of consolidation.

With larger entities continuing to grow, the decentralized nature of blockchain may become increasingly appealing for people and companies desiring autonomy from excessive institutional control.

While there’s reason for hope about the Trump administration’s stance on cryptocurrency, it’s essential to remember that changes in policy can be slow and complex. Optimism should be balanced with a practical approach.

Despite this, the occurrence of such discussions in top-tier government circles, alongside the revitalized vigor within the financial markets, suggests a significant indication that the year 2025 might represent a pivotal moment for cryptocurrencies.

Where could Bitcoin go next?

crypto expert Michael van de Poppe recently highlighted the Rainbow Price Model in one of his tweets. This long-term tool divides Bitcoin’s price into different categories, from “Deep Discount” to “Peak Bubble Realm,” based on its current market position.

According to van de Poppe, any price below $110,000 is categorized as ‘Accumulation,’ and prices within the range of $110,000 to $150,000 are viewed as ‘Still Affordable.’

Currently, Bitcoin is situated within an area that analysts often refer to as a “buy zone” – this indicates that the market hasn’t yet attained the fervor or enthusiasm usually observed during past price cycles.

He ascribes this situation to a form of market post-traumatic stress disorder, where memories of past market collapses have dampened optimistic expectations. Yet, he contends that this skepticism could be unwarranted, stating “People underestimate just how high and intense this cycle will become. I believe it will be remarkably similar to the 2014-2017 cycle.

Based on the Rainbow Chart, for Bitcoin to enter the “red zones” – regions known for market highs – it would need to exceed approximately $250,000. As time goes by, certain stages might even climb as high as $375,000 or more.

While van de Poppe presents a positive outlook for the future, Benjamin Cowen focuses on the near term. He indicates that if Bitcoin follows its current short-term trend, it might hit around $120,000 by Inauguration Day on January 20th.

According to Cowen’s assessment, the prevailing market opinion is that crucial milestones such as $120,000 might serve as significant benchmarks on the path to further price increases.

As I prepare for the upcoming Federal Reserve meeting on Jan 29th, it’s clear that there’s over a 90% chance interest rates will stay put. On the surface, this stability may appear uneventful. However, any unforeseen macroeconomic event—be it a shift in employment statistics, inflation indicators, or global market fluctuations—could potentially trigger significant adjustments.

To ensure success for investors, it’s crucial to stay updated, spread investments across various areas, and closely monitor broader economic trends as the dynamic process unfolds. And a timeless tip: always be mindful not to risk more money than you are prepared to part with.

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2025-01-07 20:31