Bitcoin has fallen to a low of $92,508 on January 8 after previously hitting $102,357 on Monday, marking almost a 10% retreat in a matter of days. The immediate catalyst appears to be the January 7 spike in US Treasury yields, with the 10-year rate hitting 4.67% following an unexpectedly strong ISM Prices Paid Index and higher-than-anticipated JOLTS job openings.<\/p>\n
While these data points renewed worries that inflation could persist, many seasoned observers insist the upcoming Trump inauguration is a reason to stay bullish on Bitcoin and crypto. The analysts from LondonCryptoClub (@LDNCryptoClub)argue that \u201ceveryone is overestimating both the likelihood of tariffs<\/a> or at least the size,\u201d highlighting that when Trump was previously in office, there was \u201cno substantial inflationary impact\u201d despite high-profile tariff announcements.<\/p>\n According to the analyst,s market participants risk overlooking the fact that \u201cthe US has also got to refinance over $7trn in debt this year,\u201d which could force the Fed to keep rates lower and eventually end quantitative tightening. Raoul Pal, Founder of Global Macro Investor, echoed this sentiment by saying, \u201cI tend to agree with this take.\u201d<\/p>\n I tend to agree with this take https:\/\/t.co\/SzmHbyXoBc<\/a><\/p>\n \u2014 Raoul Pal (@RaoulGMI) January 8, 2025<\/a><\/p>\n Supporters of the pro-Bitcoin thesis point out that any tariffs introduced under a new Trump administration might be politically large but practically modest, echoing the LondonCryptoClub view that \u201cTrump goes big as a negotiation tactic and likely delivers much less.\u201d Another focal point is the emerging liquidity scenario that has bolstered risk assets in the past.<\/p>\n LondonCryptoClub sees the Fed ultimately \u201cstart to flood the market with liquidity,\u201d especially given the swift depletion of the Reverse Repo Facility and the potentially temporary respite offered by the debt ceiling. The same argument extends to a renewed wave of \u201cChina-led global disinflation<\/a>,\u201d which could pressure the United States into rate cuts if growth shows signs of stalling.<\/p>\n Chris Burniske, a partner at Placeholder VC, said he once assumed<\/a> the market would rally straight into the inauguration and then sell off, but he now foresees another scenario: \u201c\u201cAgree w this \u2013 in Q4 was thinking we\u2019d rally into inauguration and sell off after, but once that became too consensus a view + DXY & rates rallying, looks like we\u2019re shifting to pain before, Valhalla after \u2013 prefer this setup tbh\u201d<\/p>\n Some analysts see direct benefits if Trump starts publicly discussing crypto again, given how it may raise Bitcoin\u2019s profile. Crypto analyst Gammichan reminded followers that \u201cwe have a president who will be mentioning Bitcoin regularly\u201d and emphasized that a strong dollar could be \u201cfuel to pump us when it falls.\u201d<\/p>\n Gammichan also stressed that \u201c3-5% inflation is excellent for BTC\u201d and noted that while the Fed might keep rates high for the moment, it could \u201cjuice it whenever\u201d because the government\u2019s own interest expenses remain uncomfortably large, with trillions in debt to manage. This angle is further enhanced by talk that other global players, especially China, may continue to stimulate their economies, thereby boosting overall liquidity.<\/p>\n We seem to have forgotten that: \u2014 Gammichan (@gammichan) January 8, 2025<\/a><\/p>\n Felix Jauvin, host of the Forward Guidance podcast, underscored<\/a> the broader shift in market psychology by stating, \u201cWe\u2019re quickly going from \u2018sell the news\u2019, to \u2018buy the news\u2019 on inauguration<\/a>.\u201d<\/p>\n Despite this generally upbeat narrative, short-term challenges remain. Recent economic data in the United States has surprised to the upside, prompting worries that the Federal Reserve might keep policy tighter for longer. Some investors see the next few weeks as a tug of war between rising yields and the prospect of renewed global easing.<\/p>\n Still, LondonCryptoClub argues that the jump in yields might be a temporary head fake and that once the Fed recognizes how much refinancing must occur, it will be compelled to \u201chelp keep rates low\u201d and eventually revert to \u201csome form of \u2018not QE QE\u2019\u201d if the repo market shows signs of stress. Those who believe in the \u201cbuy the news\u201d thesis anticipate that as soon as the Fed\u2019s liquidity taps reopen, Bitcoin\u2019s price will likely rebound from its current slump and possibly continue higher throughout 2025.<\/p>\n
\n-We have a president who will be mentioning Bitcoin regularly
\n-MSTR is in the NASDAQ
\n-Fed is in a great position with room to juice it whenever
\n-3-5% inflation is excellent for BTC
\n-Strong DXY means fuel to pump us when it falls
\n-Fed needs to get\u2026<\/p>\n