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Highlights
- Bitcoin (BTC) is caught in a price range as uncertainty builds.
- Analysts predict potential volatility linked to economic factors and the upcoming Trump inauguration.
- Concerns grow about stagflation and its possible impact on Bitcoin’s future.
Bitcoin (BTC) has recently been moving within a range between US$91k (AU$147.8k) and US$95k (AU$154.3k). Despite a modest 1.3% increase in the past 24 hours, Bitcoin is still down by about 2.7% over the last week. The broader cryptocurrency market faces similar pressure, with prominent altcoins like Ethereum (ETH) dropping 8% and Solana (SOL) falling 9.8% in the same time frame.
Much attention is now turning towards January 20, 2025, when former President Donald Trump will formally return to office. Some market observers believe that his inauguration could trigger a rally in digital assets, especially if Trump addresses cryptocurrencies during his speech. This period could lead to an interesting scenario for Bitcoin: Would investors rush in ahead of his swearing-in, buying the “rumor” in anticipation of an announcement or recognition, only to potentially face a market correction when the event itself takes place, the so-called “buy the rumor, sell the news” scenario?
Swissblock analysts weigh in on whether this unique geopolitical moment could lead to Bitcoin breaking free from its current price range and possibly reaching new all-time highs. The analysts underscore that a market-driven rally or correction is closely intertwined with macroeconomic factors, many of which are still uncertain.
Particularly, the ongoing concerns around inflation in the U.S., the high levels of national debt, and the threat of stagflation are elements that could weigh heavily on Bitcoin’s short-term prospects. Stagflation, which refers to the combination of persistent inflation coupled with a stagnating economy, remains a significant concern. Should this economic condition continue to evolve, it could have dual implications for Bitcoin. On one hand, some investors may view it as a safe haven, a hedge against rising costs and economic instability. On the other hand, Bitcoin might be seen as a risky asset vulnerable to more macroeconomic shifts.
The Kobeissi Letter’s analysts highlighted the worrying signs of stagflation, pointing to rising prices amidst a weakening labor market. This view is echoed by Chris Kuiper, the director of research at Fidelity Digital Assets, who suggests that mounting fiscal deficits could further push inflationary pressures.
As Bitcoin’s future remains uncertain, investors must stay vigilant and assess how global economic trends influence the cryptocurrency landscape.
