Bitcoin has bounced back from its sharpest two-day decline since the US presidential election, reflecting investor uncertainty over President-elect Donald Trump’s pro-crypto policy agenda.
The digital currency dropped nearly 3% over the weekend before recovering to $92,000 as of Monday morning in London. Trump’s pledges, including a strategic Bitcoin stockpile and a favorable regulatory framework, have spurred optimism, though questions remain about the feasibility and timeline for implementation.
Market Reactions and Influences
- Market Analyst Tony Sycamore of IG Australia noted Bitcoin had become “overheated” following a rally after Election Day, with much of the good news already priced in.
- Investors remain cautious due to potential inflation risks from trade tariffs and deficit spending tied to Trump’s economic policies.
- Expectations for Federal Reserve interest-rate cuts are diminishing, which could dampen speculative demand for digital assets.
Trump’s Crypto Vision
Trump’s policy shift from a crypto skeptic to a proponent reflects heavy lobbying efforts by digital asset firms during his campaign. His administration plans to create a more crypto-friendly regulatory framework and position the US as a global hub for digital assets.
Regulatory Outlook
- JPMorgan Chase strategists predict a shift from regulation-by-enforcement to a collaborative approach, potentially enabling banks to engage more actively with crypto.
- Market participants are optimistic about the approval of crypto exchange-traded funds (ETFs) beyond Bitcoin and Ether, which could unlock new investment flows.
- However, the establishment of a US Bitcoin reserve remains a low-probability scenario.
Market Data
- US spot-Bitcoin ETFs recorded a net inflow of $4.7 billion from November 6 to November 13, pushing Bitcoin to an all-time high of $93,462.
- The subsequent outflow of $771 million over Thursday and Friday reflects ongoing market volatility, leaving the total assets in such products at $95 billion.
Investor Sentiment
While Bitcoin’s trajectory reflects the broader optimism surrounding Trump’s crypto-friendly stance, concerns about regulatory clarity, inflation, and liquidity persist. Investors are watching closely as the new administration moves to shape the future of digital assets in the US.
