Bitcoin Backs at $100K on Inflation and Trump

The New Era of Bitcoin: Are We Facing a New All-Time High?

The price of Bitcoin experienced a remarkable increase of 4.08%, closing at USD 100,497.37, driven by the recent slowdown in inflation in the United States. This change in inflation could have a significant impact on the Federal Reserve's monetary policies and the future of the cryptocurrency market. In addition to inflation, Bitcoin is also driven by the catalyst that is Donald Trump's inauguration as president.

Currently, bitcoin is trading above the EMA50, indicating a medium-term bullish sentiment / TradingView

The inflationary context and its impact on the market

The December core CPI, which excludes food and energy, stood at 3.2%, below market expectations of 3.3%. This figure alleviates concerns about a possible inflationary spike. This could allow the Federal Reserve to reduce interest rates over the course of the year. Interest rate futures traders now see the likelihood of a first cut in June, followed by another before the end of the year.

Low inflation eased the pressure on the Fed to keep interest rates high, which benefits the cryptocurrency sector. As a result, the two-year Treasury bond yield fell sharply to 4.26%, weakening the dollar against bitcoin.

Increased interest in Bitcoin futures and capital outflows halted

The total open interest in Bitcoin futures increased to $63.82 billion, representing an increase of 4.58% over the past 24 hours. This is the third consecutive increase in this indicator, indicating a positive liquidity flow in the futures market.

In addition, the streak of capital outflows from Bitcoin ETFs has stopped. Coinglass shows a reported positive net flow of $64.20 million per GBTC, suggesting renewed investor interest.

Donald Trump's Inauguration: A Catalyst for Bitcoin?

Another factor that is driving the price of bitcoin is the impending inauguration of the new US President Donald Trump. There is speculation that he could issue executive orders related to cryptocurrencies on his first day in office. Pantera Capital noted in an analysis that this inauguration could push bitcoin to new highs. The analysis compares the current situation with the launch of ETFs in January 2024.

In addition, Reuters reported that Republican SEC officials will review cryptocurrency policies starting next week. They would seek to establish clear rules on when a cryptocurrency is considered a security. This review could be an important step towards greater regulation and acceptance of cryptocurrencies in the market.

Technical Analysis: Where is Bitcoin Headed?

The rise in the price of bitcoin is accompanied by a slight increase in trading volume, exceeding the 25-day average. Currently, bitcoin is trading above the EMA50, indicating a medium-term bullish sentiment. The price avoided falling below the dynamic support of $94,700 and is now testing the downtrend line at $100,746. If it manages to break above this mark, it could move towards the resistance at $108,000, approaching its all-time highs.

With a more favorable inflation environment and the potential for significant changes to cryptocurrency regulation in the United States following Trump's inauguration, the future of bitcoin looks promising. Investors will need to keep an eye on political and economic developments that could influence the market and the price of this cryptocurrency.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in cryptocurrencies involves risks and it is recommended to consult a financial advisor before making investment decisions.