Can Trump’s inauguration spark a new all time high?

After weeks of quiet, Bitcoin has once again smashed the $100,000 mark. With $1.54 billion in $120,000 call options and Trump-era crypto speculation, is the stage set for a massive rally?

BTC breaches $100,000, again

Bitcoin (BTC) has been stealing the spotlight once again. After weeks of playing it safe in the $92,000 to $98,000 range, BTC has surged past the $100,000 mark, trading at $101,700 as of Jan. 7, still about 6% shy of its all-time high of $108,268.

Adding fuel to the fire, data shows that traders are piling into $120,000 call options with a staggering notional open interest of $1.56 billion as of Jan. 7, suggesting that traders are banking on a rally that could push Bitcoin to new heights.

A call option gives someone the right (but not the obligation) to buy Bitcoin at a specific price later. It’s basically a bet that prices will go higher.

Why all this optimism? As President-elect Donald Trump prepares to take office in the coming days, speculation is swirling that his administration might usher in a more crypto-friendly era.

So, what does all this mean for Bitcoin’s future? Let’s dive deeper into the data, dissect the market sentiment, and explore what experts believe could unfold in the days and weeks to come.

What Trump’s inauguration could mean for crypto

As Trump prepares to be sworn in on Jan. 20, it’s shaping up to be a key moment for the digital asset industry, setting the stage for changes in how crypto is governed in the U.S.

One of the immediate shake-ups will come from the resignation of SEC Chair Gary Gensler, a polarizing figure in the crypto community known for his tough stance on digital assets.

SEC’s current approach under SAB 121 requires publicly traded banks to record crypto holdings as liabilities, making large-scale crypto custody a financially unattractive endeavour.

While Congress voted to scrap SAB 121 last year, the effort was vetoed by President Biden. Gensler’s departure could lead to a dramatic policy shift, as he is set to be replaced by former SEC Commissioner and crypto-friendly Paul Atkins.

Meanwhile, Congressman French Hill has indicated that Republican leadership plans to prioritize a comprehensive regulatory framework for crypto. This effort builds on the FIT 21 bill passed by the House in 2024, which aimed to end the tug-of-war between the SEC and the Commodity Futures Trading Commission over who gets to regulate crypto.

While FIT 21 was hailed as a landmark moment, it didn’t come without controversy. Some industry insiders felt the bill was rushed and overly restrictive, particularly in its treatment of decentralized finance.

Republican leaders have hinted that they may scrap FIT 21 and start fresh, with a focus on innovation while addressing concerns raised by the DeFi community.

But beyond the immediate policy shifts, Trump’s inauguration could signal a key shift in tone. His campaign rhetoric positioned him as a “crypto president,” and the industry is eager to see if he’ll follow through on promises like establishing a U.S. Bitcoin reserve or creating a federal crypto council.

Of course, none of this happens in isolation. The macroeconomic backdrop — interest rates, inflation data, and overall market sentiment — will play a critical role in shaping how crypto performs in the months ahead.

Macroeconomic winds: what this means for Bitcoin

This week, a string of crucial macroeconomic indicators will paint a picture of the U.S. economy’s health, and for the crypto industry, the implications are worth dissecting.

The action kicks off with the Jan. 8 ADP National Employment Report, which will show how many new jobs the private sector added in December. Analysts are projecting 130,000 jobs — a slight dip from November’s 146,000.

Jan. 9 brings another piece of the puzzle with the weekly jobless claims report. It recently hit an eight-month low, signalling that employers are holding onto workers despite the economic slowdown. If claims remain low, it might strengthen market sentiment, encouraging investors to take on more risk — which could benefit Bitcoin.

On Jan. 10, all eyes will turn to the US Consumer Sentiment Index. This metric reflects how optimistic people feel about the economy and their willingness to spend. If the index comes in strong, it could spur risk-taking among investors, giving Bitcoin a potential boost.

But there’s another twist: consumer sentiment often hints at inflation expectations. If people expect inflation to rise, Bitcoin might see renewed interest as a hedge against eroding purchasing power. However, the flip side is that inflation concerns might also embolden the Fed to raise rates, which could keep crypto gains in check.

The week wraps up with the U.S. employment report and unemployment rate. Analysts expect 155,000 new jobs — down from November’s 227,000 — while unemployment is predicted to hold steady at 4.2%.

Strong employment data usually lifts market confidence and increases interest in riskier assets like Bitcoin. On the other hand, weaker data might introduce caution, pulling investors toward safer bets.

Eventually, the Federal Reserve’s position will become clearer later this month when the Federal Open Market Committee releases its meeting minutes. These will provide clues about the Fed’s thinking on rate cuts — or lack thereof — in 2025.

Currently, markets are closely watching the upcoming FOMC meeting on Jan. 29. As of now, there is only a 9.1% chance the Fed will cut rates by another 25 basis points.

For context, the Fed already cut rates by 25 bps in December and 50 bps in September. These rate cuts injected liquidity into the market, fueling Bitcoin’s rally by increasing the flow of money into riskier assets.

However, during the December meeting, Fed Chair Jerome Powell struck a hawkish tone, signaling that future rate cuts would be heavily dependent on upcoming economic data. With over a 90% likelihood that the Fed will keep rates unchanged later this month, the stance appears neutral for now.

But any macroeconomic shock in the coming days — whether in the form of surprising inflation numbers or unexpected labor market data — could quickly alter the Fed’s trajectory, potentially impacting Bitcoin and the broader crypto market.

Crypto industry’s rising hopes

The crypto market has always thrived on narratives, and the Trump administration’s incoming policies are shaping up to be a compelling one.

Ripple’s CEO, Brad Garlinghouse, recently tweeted about this shift, noting how the “Trump effect” has revitalized confidence within the U.S. crypto sector.

Ripple, which spent years resolving regulatory challenges under Gary Gensler’s SEC, has already experienced a sea change. Garlinghouse shared that 75% of Ripple’s open roles are now U.S.-based, a dramatic reversal from recent years when most hires were abroad.

Even more striking, Ripple signed more U.S. deals in the six weeks following Trump’s election than in the previous six months — a telltale sign to the palpable optimism coursing through the industry.

Meanwhile, Trump’s picks for key roles, including Scott Bessent as Treasury Secretary and David Sacks heading the newly launched AI and Crypto Division, signal a pro-innovation stance that could fast-track growth.

On a broader economic front, Hunter Horsley’s hypothesis adds more intrigue. He suggests that the Trump administration might unfreeze mergers and acquisitions, enabling large corporations to consolidate power further.

If tech giants like Amazon or Google start snapping up competitors, the narrative of mistrust toward centralized entities could grow even stronger.

Crypto, which thrives on offering an alternative to traditional institutions, could find itself uniquely positioned to benefit from this consolidation wave, Horsley suggested.

As the “big get bigger,” the decentralized promise of blockchain might resonate even more with individuals and businesses seeking independence from institutional overreach.

Yet, optimism should be tempered with pragmatism. While the Trump administration’s early signals are pro-crypto, it’s critical to recognize that policy shifts take time.

Nonetheless, the fact that these conversations are happening at the highest levels of government, coupled with the market’s renewed energy, is a strong signal that 2025 could mark a turning point for crypto.

Where could Bitcoin go next?

Crypto analyst Michaël van de Poppe, pointed to the Rainbow Chart in his recent tweet, a long-term indicator that categorizes Bitcoin’s price into various zones, ranging from “Fire Sale” to “Maximum Bubble Territory.”

Van de Poppe explains, “Anything beneath $110K is classified as ‘Accumulation,’ while the range between $110-150K is considered ‘Still Cheap.’”

At present levels, Bitcoin remains in what he would call a buy zone — a signal that the market hasn’t yet reached the kind of euphoria typically seen in previous cycles.

He attributes this to a kind of market PTSD, where scars from prior crashes have tempered bullish sentiment. However, he argues that this pessimism may be misplaced, noting, “People literally don’t expect how high and extreme this cycle is going to be. I think it will be substantially comparable to the 2014–2017 cycle.”

According to the Rainbow Chart, reaching even the lower bounds of “red zones” — areas historically associated with market peaks—would require Bitcoin to surpass $250K, with some stages hitting $375K or higher as time progresses.

But while van de Poppe paints an optimistic long-term picture, Benjamin Cowen zooms in on the short-term trajectory. Cowen notes that if Bitcoin revisits its short-term trendline, it could reach $120,000 by Trump’s inauguration on Jan. 20.

Cowen’s analysis aligns with the current market sentiment, where traders are eyeing key psychological levels like $120,000 as potential stepping stones for further gains.

However, the Federal Reserve’s Jan. 29 meeting looms large, with over a 90% chance that rates will remain unchanged. While this neutrality might initially seem neutral, any unexpected macroeconomic shock — whether in employment data, inflation figures, or global markets — could lead to sharp corrections.

For investors, staying informed, diversifying, and keeping a close eye on macroeconomic signals will be essential as this exciting cycle unfolds. Always remember the golden rule: never invest more than you can afford to lose.