Donald Trump, who won the presidential race in November, brought a surge to Bitcoin and altcoins. In the rally initiated by Trump, Bitcoin reached new highs of $108,000, while Ethereum exceeded $4,000.
However, this rally lost momentum as the new year approached, and the Bitcoin price fell to $90,000 levels.
At this point, while it is wondered whether the declines will continue, analysts generally think that the cryptocurrency market is moving away from the Trump narrative.
Analysts say the dollar has strengthened due to the shift away from the Trump narrative and the hawkish statements coming from the Fed, putting pressure on cryptocurrencies such as Bitcoin.
Therefore, analysts noted that they expect Bitcoin to face downward pressure in the short term.
Zach Pandl, head of research at digital asset manager Grayscale Investments, told CNBC that the current headwind for Bitcoin is a stronger dollar.
Pandl said that Bitcoin is being held back by the strength of the USD, adding that this situation is temporary and will change as Trump's inauguration day approaches.
Pandl added that BTC’s declines over the past two days were mainly due to markets starting to realize that the Trump administration’s policies, including tariffs, would have a negative impact on BTC.
“The employment report raised expectations that the Fed would delay interest rate cuts, thus supporting the dollar. As the dollar strengthened, it put downward pressure on the Bitcoin price. So the problem for Bitcoin right now is the strong dollar.”
Pandl added that despite the macroeconomic challenges, the bullish outlook for Bitcoin remains.
Apart from Grayscale analyst Zach Pandl, Alex Thorn, head of research at crypto-focused firm Galaxy Digital, also stated that the decline in Bitcoin was due to the cautious stance of the Fed and the uncertainties surrounding Trump’s economic policies.
Thorn also warned that the factors he listed could lead to short-term declines in risky assets like Bitcoin.
JPMorgan analyst Kenneth Worthingto said that the potential positive effects of pro-crypto legislation may not be immediate, as Congress is expected to prioritize non-cryptocurrency issues in the next three months. At that point, cryptocurrency prices may not experience the expected increases in the short term.
*This is not investment advice.
