he price of Bitcoin has been highly volatile, recently trading around the $95,500 level after a breakdown below the key psychological level of $100,000. Traders are bracing themselves for more liquidity emanating from the US Federal Reserve and possible regulatory overhauls from the new Trump administration, which will take office on January 20, 2025.
Fed Liquidity and Its Impact on Bitcoin
BitMEX co-founder Arthur Hayes has a view that the US Treasury will inject more than $612 billion into the economy before March 2025. The new liquidity could give a buffer to concerns by investors on crypto regulations that are delayed. He said, "If we add the dollar liquidity amounts from the Fed and Treasury until the end of the first quarter, the total is $612 billion."
Analysts are still upbeat despite the regulatory setbacks, with some calling for a cycle top well above $150,000 by late 2025. That view is predicated on expectations of a $20 trillion rise in the global money supply, which could draw roughly $2 trillion into Bitcoin.
Regulatory Concerns Ahead of Trump's Inauguration
The upcoming inauguration of President-elect Donald Trump has elicited mixed feelings among the cryptocurrency community. While many view his administration as potentially favourable for crypto, delays in the rollout of regulatory frameworks might water down investor sentiment.
Current market conditions are suggesting a "Trump dump" with predictions of a drop in Bitcoin price to around $88,000 due to the prevailing macroeconomic uncertainties.
Bitcoin has already shed more than $5,000 in the past few days due to increased selling pressure from spot exchanges. Analysts are keeping a close eye on the $95,000 level as a breach might lead to further declines.
Technical Analysis: Bitcoin's RSI and Market Sentiment
Recent market moves have brought Bitcoin to its weakest relative strength index reading since October. Having topped out at 81.7 on January 6, the RSI has dropped to just 29.3, indicating oversold conditions—something that has classically often preceded short-price rebounds.
Now traders are expecting the bounce back from the oversold conditions; some note that this should happen immediately after the holidays, at which time institutional investors are likely re-entering the market, putting Bitcoin back on its feet and possibly over $100,000 before Trump's inauguration.
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