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The cooling down of the crypto-leveraged market after months of heavy speculation could lead to short-term Bitcoin price weakness despite the renewed interest from whale investors.
After rallying to a new all-time high (ATH) of about $109K on Monday during the 2nd inauguration of pro-crypto US President Donald Trump Bitcoin price BTC $96 434 24h volatility: 0.0% Market cap: $1.91 T Vol. 24h: $28.32 B dropped over 5% in the last 24 hours to trade about $102,326 on Tuesday, January 21, during the mid-London session. The flagship coin has now retested the crucial support level above $100K for the second time, signaling a potential bullish sentiment in the near term.
From a technical price analysis, Bitcoin price has been retesting the bullish breakout from a narrowing wedge, which formed in mid-November. However, the bearish short-term sentiment could prevail, especially after BTC closed Monday in a shooting star candlestick.
The short-term bearish sentiment is bolstered by the higher-than-expected inflation and a more hawkish sentiment from the Federal Reserve chair ahead of the rate policy change next week. Nonetheless, Bitcoin’s macro bullish sentiment is heavily influenced by the optimism of Donald Trump’s positive crypto regulatory action.
On the first day of office, Trump directed the government agencies to work on reducing inflation and the cost of living.
Additionally, long-term investors are banking on the adoption of Bitcoin by nation-states, especially when the Trump administration establishes a strategic BTC reserve. As Coinspeaker reported, several US states led by Massachusetts, Texas, and Utah have already introduced a proposal for a strategic BTC reserve.
The demand for Bitcoin among institutional investors has remained high, as a hedge against global inflation, fiat devaluations, and macroeconomic market uncertainties. According to market data analysis by CoinGlass, Bitcoin’s open interest (OI) retested its all-time high above $67 billion.
Meanwhile, the overall supply of Bitcoin on centralized exchanges has continued to drop to a multi-year low of about 2.19 million, further escalating the supply vs demand shock. The anticipated entrance of nation-states into the Bitcoin industry has further increased the appetite of institutional investors.
For instance, World Liberty Financial (WLFI) commemorated the inauguration of Trump with a strategic crypto purchase, worth over $100 million. The Trump family-backed DeFi protocol purchased $47 million in Wrapped Bitcoin WBTC $96 415 24h volatility: 0.2% Market cap: $12.47 B Vol. 24h: $389.26 M , thus cementing the President’s position on digital assets.
On Monday, El Salvador defied the criticism from the IMF and purchased 11 BTC, thus currently holding over 6,043 Bitcoins, worth over $611 million.
Meanwhile, the US spot BTC ETFs have been major Bitcoin purchasers in the past year. Led by BlackRock’s IBIT and Fidelity’s FBTC, the US spot Bitcoin ETFs have accumulated more than 1 million BTCs, worth over $120 billion at the time of this writing.
As a result, it is safe to assume that the future of Bitcoin is brighter than before, especially with Trump as the US president.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Let’s talk web3, crypto, Metaverse, NFTs, CeDeFi, meme coins, and Stocks, and focus on multi-chain as the future of blockchain technology. Let us all WIN!