The cryptocurrency market is bracing for turbulence as the new U.S. administration takes office. The largest cryptocurrency, Bitcoin, is recovering after a shaky start to the year as investors debate the future of crypto under President Trump.
Tanaya Macheel, a market analyst, suggests that the first quarter could be a volatile one as conflicting elements of the administration’s agenda come to the fore. A pro-crypto White House and Congress present opportunities for better regulation, while other policies like tariffs that strengthen the US dollar could weigh on Bitcoin’s price.
Bitcoin rallied over 45% in the month following the election, but tariff concerns have dampened enthusiasm and posed risks to both cryptocurrencies and the broader markets. “This clash between pro-crypto regulation and a stronger dollar shows the dual nature of the administration’s influence on crypto trading,” Macheel said.
Despite the short-term risks, analysts remain optimistic about Bitcoin’s long-term potential. It’s been a year since Bitcoin ETFs were approved, and their growing popularity, combined with regulatory clarity, could boost Bitcoin prices. Some investors believe BTC could double in value by the end of the year, helped by congressional debates on issues like stablecoins and market structure.
However, Macheel warned that the effects of any regulatory progress may not be felt until later in the year, leaving room for market uncertainty in the meantime.
Phil, a portfolio manager, noted the impact of Bitcoin ETFs like BlackRock’s IBIT, the most successful ETF launch in history. However, he noted that a shift occurred last week when the fund recorded its first significant outflow, losing $337 million in a single day.
Phil suggested that Bitcoin’s consolidation phase could either lead to higher highs or a temporary shakeout in weak hands. While the inauguration could prompt a “buy the rumor, sell the news” reaction, it could set the stage for a stronger rally.
*This is not investment advice.
