Bitcoin Plunges Below $92,000 Amidst Market Volatility: What Does Trump's Inauguration Mean for Crypto's Future?

Bitcoin Plunges Below $92,000 Amidst Market Volatility: What Does Trump's Inauguration Mean for Crypto's Future?On January 6th, Bitcoin surged past the $100,000 mark, only to see a dramatic market reversal. By January 10th, Bitcoin experienced significant volatility, plummeting below $92,000, reaching a low of $91,200 and triggering widespread liquidations across the cryptocurrency market

Bitcoin Plunges Below $92,000 Amidst Market Volatility: What Does Trump's Inauguration Mean for Crypto's Future?

On January 6th, Bitcoin surged past the $100,000 mark, only to see a dramatic market reversal. By January 10th, Bitcoin experienced significant volatility, plummeting below $92,000, reaching a low of $91,200 and triggering widespread liquidations across the cryptocurrency market. Ethereum, Dogecoin, and other cryptocurrencies also suffered declines, fueling a widespread sense of panic. Coinglass data revealed that nearly 134,200 investors were liquidated in the past 24 hours, resulting in losses totaling $374 million. Long positions accounted for $260 million of these losses, while short positions accounted for $115 million. Bitcoin liquidations alone reached $99.74 million, with Ethereum liquidations totaling $6,966.81.

This crypto market crash occurred after Bitcoin's price had steadily climbed above $100,000 throughout 2024, reaching new highs in early 2025. With the imminent inauguration of President Trump, Bitcoin's price swings intensified, reaching new lows for 2025. At the time of writing, the price has somewhat recovered, standing at $94,701.82.

OKX data shows that between the evening of January 9th and the morning of January 10th, Bitcoin fell below $92,000, hitting a low of $91,200. This downturn rapidly spread to other cryptocurrencies. Ethereum dropped below $3,200, SOL fell below $190, and numerous AI-related tokens suffered widespread declines. For example, ai16z experienced a 18.05% drop in 24 hours, FARTCOIN fell 22.09%, and ZEREBRO dropped 14.9%. CoinGecko data indicates that the total cryptocurrency market capitalization fell to $3.4 trillion, a 3.4% decrease in 24 hours.

Zhao Wei, a senior research fellow at OKX Research Institute, stated that while the Bitcoin price correction from $100,000 to its current level seems significant, it's not exceptionally unusual in the highly volatile crypto market.

This market correction may be linked to a US Department of Justice (DOJ) ruling. Reports indicate the DOJ received approval from the US District Court for the Northern District of California to sell 69,370 Bitcoin seized from the illegal darknet market "Silk Road." At a price of $94,000 per Bitcoin, the sale could inject nearly $6.5 billion into the market. However, Coindesk analyst James VanStraten suggests that market concerns about this sell-off may be overblown, as the Bitcoin is likely to be sold in an orderly manner to maximize price and the market has already anticipated this possibility.

Zhao Wei believes that the news of potential US Bitcoin liquidation, in the absence of sufficient price support, further eroded market confidence, prompting increased selling pressure and exacerbating Bitcoin's downward trend. He analyzes that after months of positive sentiment, the market has largely digested the impact of news related to Trump's administration and potential Fed rate cuts, resulting in a cooling of enthusiasm. Furthermore, net inflows into Bitcoin spot ETFs haven't shown significant growth, remaining at mid-December 2024 levels. These factors combined contributed to the Bitcoin price correction.

In 2024, Bitcoin's price soared, driven by several factors, including the adoption of Bitcoin as a corporate reserve asset by multiple companies and continuous buying pressure from institutional investors. MicroStrategy pioneered this trend in 2020, and many companies followed suit, becoming a key driver of Bitcoin's price increase. Into 2025, institutional buying remained strong. On January 9th, Nasdaq-listed crypto mining company CleanSpark announced its Bitcoin holdings exceeded 10,000 coins, reaching 10,097, making it the fifth-largest publicly traded Bitcoin holder in the US, behind MicroStrategy, MARA, Riot Platforms, and Hut8. By early 2025, MicroStrategy held over 440,000 Bitcoin. Furthermore, Trump's pro-crypto stance during the 2024 election and his subsequent appointments (many crypto-friendly) to his new administration fueled market optimism. Bitcoin surpassed $80,000 on November 10th and $90,000 on November 13th, 2024, before breaking the $100,000 barrier on December 5th.

Trump's second inauguration is scheduled for January 20th, 2025. Why the sharp market downturn now? What are market expectations for his official inauguration? Analyst Omkar Godbole suggests the current decline stems from a perception that the positive effects of Trump's inauguration are already priced in ("buy the rumor, sell the news"). However, he also believes that Trump's administration could reshape cryptocurrency regulations and even strategic Bitcoin reserves in the coming months, potentially setting the stage for the next rally.

Zhao Wei believes Trump's inauguration could act as a catalyst for increased volatility in the crypto market, but the specific direction remains dependent on policy implementation and market feedback. He points out that whether Trump introduces pro- or anti-crypto policies will significantly impact market confidence, capital flows, and price fluctuations. Furthermore, adjustments to US monetary policy and other economic factors, the ripple effect of Trump's policies on other major economies, and geopolitical shifts impacting the international economic environment could indirectly affect the crypto market.

In Hong Kong, regulatory processes for the crypto market are accelerating. In December 2024, the Hong Kong Securities and Futures Commission rapidly issued licenses to four virtual asset trading platform applicants, bringing the total number of licensed platforms to seven and further boosting the sector's activity in the region.

Zhao Wei advises traders to establish clear goals and strategies based on their risk tolerance, avoid blindly following trends, and closely monitor market dynamics and policy changes to adapt to potential fluctuations in the current market environment.