Bitcoin’s price has taken a hit, dropping to $92,508 on January 8 from a high of $102,357 just days earlier. The sudden decline is attributed to a spike in US Treasury yields on January 7, with the 10-year rate reaching 4.67% following strong economic data.
Despite the short-term setback, experts are optimistic about Bitcoin’s future, especially with the upcoming Trump inauguration. Analysts from LondonCryptoClub believe that fears of inflation might be overblown, citing Trump’s previous tenure where tariff announcements did not lead to significant inflation. They also point out that the US needs to refinance over $7 trillion in debt this year, which could keep interest rates low.
Raoul Pal, Founder of Global Macro Investor, agrees with this perspective, emphasizing the potential for the Fed to maintain accommodative monetary policy. The expectation is that any tariffs imposed by Trump would be more symbolic than substantive, with the US likely facing pressure to cut rates if global growth falters.
The prospect of increased liquidity in the market is another reason for optimism. LondonCryptoClub predicts that the Fed will inject more liquidity, especially as the Reverse Repo Facility faces depletion. This, combined with potential global disinflation led by China, could lead to rate cuts in the US.
Some analysts see a direct benefit if Trump starts discussing cryptocurrencies publicly, as it could raise awareness and adoption. Gammichan, a crypto analyst, highlights the potential for a strong dollar to boost Bitcoin when it falls, as well as the positive impact of moderate inflation on BTC.
Market sentiment is shifting from “sell the news” to “buy the news” ahead of the inauguration, according to Felix Jauvin, host of the Forward Guidance podcast. Despite short-term challenges such as rising yields and global economic uncertainty, many believe that once the Fed reopens its liquidity taps, Bitcoin’s price will rebound and continue to rise in 2025.
History shows that the US dollar tends to weaken after an initial rally during Trump’s presidency, which could benefit Bitcoin and the broader crypto market. Combined with potential stimulus measures from central banks, a weaker dollar would likely support Bitcoin’s price.
At the time of writing, Bitcoin is trading at $93,596, with the potential for a rebound in the near future. The market remains optimistic about Bitcoin’s prospects, especially in light of the upcoming Trump inauguration.