TL;DR

Bitcoin reached an all-time high in December after Trump’s victory but has since dropped due to macroeconomic factors.
K33 Research reevaluates its initial “sell on inauguration” stance due to a lack of market momentum.
Trump’s economic policies could have a long-term impact on Bitcoin, but analysts recommend caution. 

Since Donald Trump won the U.S. presidential election in November, the Bitcoin market has experienced significant fluctuations. Initially driven by optimism over his pro-crypto policies, Bitcoin hit an all-time high of $108,000 on December 17. However, the leading cryptocurrency has since dropped 18%, currently trading at $96,793 at the time of writing. The decline highlights the growing influence of external macroeconomic pressures, which have overshadowed the initial excitement surrounding Trump’s win.

Strategy Shift: Sell or Hold? 

K33 Research, known for its in-depth financial analysis, recently questioned its original recommendation to “sell on inauguration day,” set for January 20. According to their report, macroeconomic factors have dampened the market’s initial enthusiasm. These factors include a stronger dollar, rising 10-year bond yields, and reduced expectations for Federal Reserve rate cuts due to inflationary forecasts. Analysts also cited waning confidence in the immediate implementation of pro-crypto policies, which has further cooled market sentiment. 

Back in November, the pro-Bitcoin narrative revolved around Trump’s promise to implement favorable economic policies, such as tax cuts and looser regulations for cryptocurrencies. However, analysts Vetle Lunde and David Zimmerman noted that initial optimism has shifted to a more cautious market stance. According to them, the inauguration, which once appeared to be a “sell the news” event, now seems less attractive for selling strategies due to uncertain short-term market behavior. 

Lessons from the Past

When comparing the market reaction before Trump’s two administrations, analysts observed key similarities and differences. In 2016, the S&P 500 showed stability after the election, maintaining this trend until the inauguration. This year, however, volatility has increased, particularly following the Federal Open Market Committee meeting in December. The divergence underscores the evolving nature of investor sentiment and its sensitivity to broader economic signals. 

During his first term, Trump emphasized economic growth as a direct result of his policies, and K33 analysts expect this narrative to resurface. While long-term expectations for Bitcoin under Trump remain positive, they caution that, without renewed momentum in the markets, investors should avoid making hasty decisions. 

Therefore, while Trump’s inauguration marks an important moment, K33 experts urge investors to carefully evaluate market conditions before making any decisions related to Bitcoin, emphasizing the importance of strategic patience.

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Filed under: News - @ January 14, 2025 6:15 pm