Why The Trump Inauguration Is A ‘Buy The News’ Event
After hitting $102,357 on Monday, Bitcoin fell to a low of $92,508 on January 8, losing nearly 10% in a few days. The immediate catalyst appears to be a surge in US Treasury yields on January 7, with the 10-year Treasury yield hitting 4.67% after an unexpectedly strong ISM Price Pay Index and higher-than-expected JOLTS job openings.
Why Trump’s inauguration is good for Bitcoin
While the data has reignited concerns that inflation may persist, many seasoned observers insist that the upcoming Trump inauguration is a reason to remain bullish on Bitcoin and cryptocurrencies. Analysts at LondonCryptoClub (@LDNCryptoClub) believe, “Everyone is overvaluing Possibility of tariffs Or at least the scale,” stressing that during Trump’s previous administration, despite high-profile announcements of tariffs, “there was no substantial inflationary impact.”
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The analyst said market participants may be overlooking the fact that “the U.S. must also refinance more than $7 trillion in debt this year,” which could force the Fed to keep interest rates lower and eventually end quantitative tightening. Raoul Pal, founder of Global Macro Investor, echoed that sentiment, saying: “I tend to agree.”
I tend to agree with this view https://t.co/SzmHbyXoBc
— Raoul Parr (@RaoulGMI) January 8, 2025
Supporters of the pro-Bitcoin argument point out that any tariffs introduced by the new Trump administration may be politically significant but are actually very mild, echoing the London Crypto Club’s view that “Trump as a Big moves are likely to be far less effective as a result of negotiating strategies. “Another focus is on emerging liquidity conditions that have boosted risk assets in the past.
LondonCryptoClub believes that the Fed is finally “starting to inject liquidity into the market,” especially given the rapid depletion of the reverse repo facility and the possible temporary respite from the debt ceiling. The same argument extends to the new round of “China-led global deflationIf economic growth shows signs of stalling, that could force U.S. interest rates to be cut.
Placeholder VC partner Chris Burniske said he had assumed The market will rebound directly before the inauguration and then sell off, but he now foresees a different scenario: “Agree with that – in the fourth quarter, we think we will rebound after the inauguration and then sell off, but once that view Becoming too consistent, that’s one view + DXY and rates rising, looks like we’re turning to pain before and Valhalla after – honestly prefer this setup”
Some analysts believe there would be immediate benefits if Trump began to discuss cryptocurrencies publicly again, as it could boost Bitcoin’s profile. Cryptocurrency analyst Gammichan reminded followers that “we have a president who mentions Bitcoin on a regular basis,” stressing that a strong U.S. dollar could “provide us with momentum when the dollar falls.”
Gammichan also emphasized that “3-5% inflation is excellent for BTC,” noting that while the Fed may keep interest rates high for now, it could “raise rates at any time” as the government’s own interest payments remain too high. Disturbing, trillions of dollars in debt. to manage. This view is further reinforced by the suggestion that other global players, notably China, may continue to stimulate their economies, thus boosting overall liquidity.
We seem to have forgotten:
-We have a president who regularly mentions Bitcoin
-MSTR is listed on Nasdaq
-The Fed is well-positioned and has room to act at any time
-3-5% inflation is great for BTC
-Strong DXY means fuel for us when it falls
-The Fed needs to…— Gammichan (@gammichan) January 8, 2025
Felix Jauvin, host of the Forward Guidance podcast, Underline There’s a broader shift in market psychology, he said: “We’ll soon be moving from ‘sell the news’ to ‘buy the news’ inauguration ceremony“.
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Despite overall optimism, short-term challenges remain. The recent unexpected uptick in U.S. economic data has raised concerns that the Federal Reserve may maintain tightening policy for longer. Some investors believe the coming weeks will be a tug-of-war between rising yields and the prospect of another round of global policy easing.
However, LondonCryptoClub believes that the rise in yields may be just a temporary illusion and that once the Fed realizes how much refinancing must occur, it will be forced to “help keep interest rates low” and eventually return to “some form of ‘not quantitative easing'” of quantitative easing.” ‘” If the repo market shows signs of stress. Those who believe in the “buy the news” argument expect that Bitcoin’s price may rebound from the current downturn and possibly continue higher in 2025 once the Fed reopens liquidity.
Market watchers remember, During Trump’s early years as presidentThe dollar initially rose but quickly peaked. LondonCryptoClub noted that “markets reacted this way last time Trump was elected, with the dollar peaking very quickly,” suggesting that a similar scenario could play out again, with the dollar briefly rising before weakening.
Coupled with the possibility of coordinated stimulus from major central banks, any sustained reversal in the U.S. dollar could spell good news for Bitcoin and the broader crypto market.
At press time, BTC was trading at $93,596.
Featured image created using DALL.E, chart from TradingView.com
