Bitcoin Pulls Back After Rally, Trump Boost Digested, But Optimism Remains

Bitcoin Pulls Back After Rally, Trump Boost Digested, But Optimism RemainsBitcoin has pulled back after hitting a high of $90,000, seemingly entering a period of consolidation. Some traders suggest the market is digesting the positive impact of Trump's presidency on cryptocurrencies, causing the Bitcoin surge to pause temporarily

Bitcoin Pulls Back After Rally, Trump Boost Digested, But Optimism Remains

Bitcoin has pulled back after hitting a high of $90,000, seemingly entering a period of consolidation. Some traders suggest the market is digesting the positive impact of Trump's presidency on cryptocurrencies, causing the Bitcoin surge to pause temporarily. As of writing, Bitcoin is trading around $86,000. The cryptocurrency has surged over 30% since Trump's victory in the US election.

Tony Sycamore, market analyst at IG Australia Pty, said that while there's still potential for Bitcoin to rise further, much of the good news has already been priced in. What remains optimistic is Trump's previous promise to establish a more favorable regulatory framework for cryptocurrencies and build a pioneering Bitcoin strategic reserve, making the US the global center of the crypto industry again. This is the fundamental driver of this round of Bitcoin price increase.

However, as the market shifts its focus to Trump's tariffs, corporate tax cuts, and immigration issues, some analysts are concerned that the new administration's support for the crypto industry may be relegated to a secondary priority. Meanwhile, most of Trump's policies are expected to drive up US inflation, leading to higher US Treasury yields and the dollar, which would be bearish for safe-haven assets like gold and cryptocurrencies.

Despite this, optimism still prevails in the crypto market. Noelle Acheson, a crypto analyst, said that the relatively moderate leverage in the cryptocurrency market mitigates the risk of a significant pullback. The temporary consolidation is necessary and welcome, but she expects it to be short-lived as tailwinds remain strong. Deribit data shows that Bitcoin call options are currently heavily betting on the price breaking through $100,000.

The inflow of funds into US Bitcoin spot ETFs is even more "fierce." On Thursday, a Bitcoin ETF under BlackRock received over $1.1 billion in daily inflows, setting a new record.