Bitcoin (BTC) is up 1.2% this week, trading at
$105,023, as investors weigh the potential impact of Donald Trump’s presidency
on the cryptocurrency market. Trump's inauguration as the 47th President of the
United States on Monday was a pivotal moment, with high expectations for
pro-crypto announcements.
Bitcoin initially surged by 6.0% to hit a new
all-time high of $109,974 on Monday. However, a lack of direct mention of
cryptocurrencies in Trump’s inauguration speech disappointed markets, leading
to a 1.0% pullback to $102,584.
The second day of Trump’s presidency brought
renewed optimism amid speculation that he might issue executive orders to lift
restrictions on banks, allowing them to trade and hold crypto assets. Trump
also pardoned Ross Ulbricht, founder of the Silk Road marketplace, who has been
serving a life sentence. This action resonated with parts of the crypto
community, where Ulbricht is regarded as a symbol of "crypto
martyrdom."
In a further boost, Trump appointed Mark Uyeda
as acting chair of the Securities and Exchange Commission (SEC), replacing Gary
Gensler, who was widely seen as a crypto adversary. Uyeda's appointment was
coupled with the formation of a crypto-focused task force led by Hester Peirce,
nicknamed "Crypto Mom" for her support of digital assets. Bitcoin
responded positively, climbing to $107,228.
Despite these developments, expectations
remain high for Trump to officially declare Bitcoin a reserve asset of the
United States. Without such an announcement, Bitcoin’s upside appears limited,
likely fluctuating between $100,000 and $110,000 in the near term.
Investor sentiment remains cautiously
optimistic. Net inflows into major Bitcoin ETFs, including IBIT (BlackRock),
FBTC (Fidelity), and GBTC (Grayscale), reached $461.3 million last week, a
stark contrast to the $130 million outflows from the previous week. However,
the excitement has been tempered by the launch of Trump-related memecoins $Trump
and $MELANIA, which attracted billions of dollars and surged by hundreds of
percent, diverting liquidity from other cryptocurrencies and frustrating parts
of the crypto community.
Altcoins have suffered amid reduced market
liquidity, with many questioning the utility of the new memecoins. While some
argue they embody crypto’s libertarian ethos, others view them as a distraction
from more meaningful developments in the space.
Looking ahead, Bitcoin’s path to its
medium-term targets of $150,000 to $200,000 by mid-2025 remains uncertain.
Further announcements, particularly around adding Bitcoin to U.S. reserves,
would be a strong catalyst. Without such measures, prices could slip below $90,000,
presenting potential buying opportunities for long-term investors.