Bitcoin’s rapid rise to all-time highs following Donald Trump’s victory in the US presidential election has been tempered by macroeconomic hurdles, prompting K33 analysts to reassess their earlier prediction that the January 20 inauguration would trigger a “sell the news” event.
K33 analysts Vetle Lunde and David Zimmerman previously suggested that Bitcoin’s rally, fueled by Trump’s pro-crypto campaign promises, would face a reality check as Washington’s political processes slowed expectations. But the sell-the-news case is becoming less appealing as the inauguration draws near, the analysts wrote in a report today.
The report laid out competing market forces, including the inflationary impact of Trump’s tariff rhetoric and the potential support that expected tax cuts and favorable crypto policies would provide to risk assets.
“The euphoria of November came and went as the S&P 500 closed its post-election gap and Bitcoin hit two-month lows,” the analysts wrote. “Our monthly outlook was to sell the news on the inauguration, but we are restating that strategy as selling Bitcoin on the inauguration is far less attractive unless there is renewed momentum in the coming days.”
Bitcoin fell nearly 18% to around $89,000 on Monday after peaking just above $108,000 on Dec. 17. The decline was driven by macroeconomic pressures, including rising yields on 10-year Treasury notes, a stronger U.S. dollar and rising inflation forecasts, along with diminishing expectations for Fed rate cuts.
“The market was driven by Trump enthusiasm in November until mid-December, but since then conservatism and caution have taken over,” the analysts said.
Despite the short-term fluctuations, K33 maintains a long-term bullish view on Bitcoin during Trump’s presidency. Trump has often pointed to stock market performance as an indicator of economic success during his first term, driven by policies such as tax cuts, deregulation and trade agreements. Analysts expect this rhetoric to resurface, potentially benefiting Bitcoin and other risk assets.
“We maintain our long-term bullish outlook on Trump’s impact on Bitcoin,” the report said, signaling optimism for BTC as the new administration takes office.
*This is not investment advice.
