New Risks for Bitcoin Prices Following the End of the Trump Trade
The end of the Trump trade raises risks for Bitcoin, with potential declines below $90,000. Following the December 2022 Federal Reserve announcement, Bitcoin’s price has remained stagnant between $90,000 and $100,000. While analysts predict short-term downturns, medium-term outlooks appear optimistic as investors prepare for future rebounds. The altcoin market remains closely tied to Bitcoin’s movements, facing possible underperformance amid volatility.
The conclusion of the Trump trade has introduced new risks for Bitcoin’s pricing trajectory, hinting at potential declines below $90,000 and possibly even the $80,000 mark. Historically, the Trump trade catalyzed an unprecedented surge in Bitcoin’s value, propelling it past $100,000 for the first time. However, since the Federal Reserve’s pivot in December 2022 regarding interest rates, Bitcoin has languished within a narrow band between $90,000 and $100,000, raising concerns about its future performance.
The end of the Trump trade coincided with significant changes in market sentiment following an announcement from the Federal Reserve on December 18, which adjusted its projected rate cuts for 2025. This shift prompted a recalibration in market attitudes, leading to a more conservative outlook, temporarily dampening the exuberance that had characterized earlier trading weeks. In light of recent developments, including a press conference with Donald Trump that unearthed market unease, questions now arise regarding the sustainability of the previous market optimism associated with his presidency.
Analysts are now forecasting possible declines, with some even suggesting that Bitcoin could fall below the psychologically significant $90,000 mark. Notably, Bitcoin has yet to dip below this threshold since the onset of the Trump trade. Further discussions in the market revolve around expectations of a potential downturn, leading to a consensus that, in the short term, declines may be imminent, with $88,000 cited as a plausible target. In the medium to long term, however, sentiments appear more positive, as investors seem to be preparing to reinvest in Bitcoin at lower price points, indicating a potential rebound in the months ahead.
Concerning altcoins, it is observed that their performance is currently closely tied to Bitcoin. Should Bitcoin experience a downturn, altcoins are likely to follow suit. Instances of individual altcoins outperforming Bitcoin during market volatility are noted but remain exceptions rather than the rule. As the crypto landscape is dominated by Bitcoin’s pricing movements, analysts suggest that altcoins might experience sharper declines relative to Bitcoin during adverse market conditions. Conversely, the prospect of considerable capital influx into risk-on assets may revitalize market dynamics in the coming year.
The Trump trade refers to the optimistic market conditions that followed Donald Trump’s electoral victory in November, which had a significant impact on financial markets, particularly Bitcoin. Prior to this victory, Bitcoin had not surpassed the $75,000 threshold. However, following the announcement, Bitcoin’s price spiked dramatically, reaching milestones of $76,000, $80,000, and even crossing the $100,000 mark shortly thereafter. The ending of this trend in December 2022, marked by Federal Reserve comments regarding interest rates, has now invited speculation about future price risks for Bitcoin and altcoins.
The conclusion of the Trump trade presents complex challenges for Bitcoin’s pricing trajectory. While immediate forecasts anticipate possible declines, with a notable risk of dipping below $90,000, medium-term sentiments reflect a less dire outlook as investors eye opportunities for reinvestment. Furthermore, the altcoin market’s performance remains heavily intertwined with Bitcoin, typically lagging behind during periods of volatility. Overall, the potential for a market rebound is dependent on future trading dynamics and investor behaviors in 2025.
Original Source: en.cryptonomist.ch
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