Bitcoin Plunges Nearly $7,000 Amidst Trump Meme Coin Volatility and Shifting Crypto Policy Expectations

Bitcoin Plunges Nearly $7,000 Amidst Trump Meme Coin Volatility and Shifting Crypto Policy ExpectationsOn January 20th, Bitcoin experienced a sharp price drop, plummeting nearly $7,000 in a short period and briefly falling below the $100,000 mark. CoinGlass data showed a continuous downward trend for Bitcoin over four hours

Bitcoin Plunges Nearly $7,000 Amidst Trump Meme Coin Volatility and Shifting Crypto Policy Expectations

On January 20th, Bitcoin experienced a sharp price drop, plummeting nearly $7,000 in a short period and briefly falling below the $100,000 mark. CoinGlass data showed a continuous downward trend for Bitcoin over four hours. At the time of writing, Bitcoin was trading at $101,273.3, representing a near 3% daily decline. This impacted the broader cryptocurrency market, with Ethereum falling 3% and Dogecoin dropping over 11%. This dramatic Bitcoin price fluctuation is closely linked to recent events, including the launch of the highly publicized Trump Meme coin (TRUMP) and the expectation of a potential shift in cryptocurrency policy under President-elect Trump.

On January 18th, President-elect Trump announced the launch of his personal meme coin, TRUMP, on his social media account, stating, "It's time to celebrate our victory! Join my 'TrumpCommunity.' Get your TRUMP token. Have fun!" Initially, this sparked speculation of a hacked account, but Trump subsequently confirmed the authenticity of the announcement on his X account.

Following its launch, the TRUMP token saw an enthusiastic market response. After Huobi listed the token at 5:40 PM (presumably local time), its price surged 1250% at one point, reaching $21 USDT. CoinGecko data showed TRUMP's market capitalization briefly hit $4 billion, placing it fourth among meme coins, behind DOGE, SHIB, and PEPE. However, it's crucial to emphasize that as a meme coin, TRUMP's price volatility is extremely high, and participation involves significant risk. In fact, TRUMP experienced a rapid price correction after its initial surge. The coin opened at $0.1824, reaching a peak of nearly $80 (a ~40,000% increase), but at the time of writing, its price had fallen back to $48.391.

Beyond the TRUMP coin's market performance, President-elect Trump's policy statements have also significantly impacted the cryptocurrency market. According to CCTV News, on January 19th, Trump held a rally in downtown Washington D.C., announcing his intention to overturn all executive orders issued by President Biden upon assuming office. He mentioned forthcoming executive orders covering border security, energy, federal spending, TikTok, and "diversity, equity, and inclusion" policies. He also stated he would detail his border security measures in his inauguration speech on the 20th.

More importantly, according to the Securities Times, Trump plans to issue an executive order elevating cryptocurrency to a policy priority and giving industry insiders a voice in his administration. This executive order could be released as early as January 20th and might include measures such as designating cryptocurrency as a national strategic priority, pausing lawsuits involving cryptocurrencies, and considering the establishment of a national Bitcoin reserve.

Market reactions to this anticipated policy shift have been mixed. Zahir Ebrahimi, founder of the crypto fund SplitCapital, stated, "The market is currently digesting the inauguration of Trump and his optimistic stance towards cryptocurrencies." Trump's shift from previous skepticism towards cryptocurrencies to prioritizing them and involving industry figures in government decision-making has undoubtedly created new market expectations.

Looking ahead, Wall Street institutions hold differing views on the future trajectory of cryptocurrencies, particularly Bitcoin. Some are optimistic. Alex Thorn, head of research at Galaxy Digital, predicts Bitcoin will surpass $150,000 in the first half of the year and reach $185,000 by the fourth quarter. Elitsa Taskova, Chief Product Officer at Nexo, is even more bullish, forecasting Bitcoin to more than double within a year, reaching $250,000, and believes the entire crypto market capitalization will exceed that of gold within the next decade.

However, not all perspectives are so rosy. Katie Stockton, a top Wall Street technical strategist, has warned that Bitcoin's upward momentum has weakened and a sell-off lasting several weeks might occur, potentially finding support around $84,500. She also noted that if prices continue to fall, the next support level could be around $73,800.

In conclusion, Bitcoin's recent plunge is closely related to the volatility of the Trump meme coin and the anticipation of a potential shift in cryptocurrency policy. While some Wall Street institutions remain optimistic, market risks persist. Investors should exercise caution, invest rationally, and avoid blindly following trends.

Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Please verify before using. Use at your own risk. Daily Economic News, compiled from Yicai, Securities Times, and CCTV News.