DailySun
On Tuesday, January 14, Bitcoin is trading above $96,000. The leading cryptocurrency has rebounded from a flash crash that took it below $90,000 and overcame macroeconomic challenges from last week. Significant profit-taking may drive BTC towards the support zones on the weekly chart, nearing the $70,000 mark.
Market Influencers for Bitcoin and the Trump Effect
The upcoming inauguration of President-elect Donald Trump on January 20 is a pivotal event that traders are closely monitoring. Trump’s potential influence over cryptocurrencies is significant, particularly with his pro-crypto selections for key positions such as Securities and Exchange Commission Chair and AI & Crypto Czar, alongside an anticipated push for pro-cryptocurrency regulations.
The price trend of Bitcoin has become increasingly linked to U.S. macroeconomic movements over the past few weeks. BTC and other cryptocurrencies are among the most liquid risk assets, and their prices are particularly sensitive to macroeconomic updates.
Bitcoin began the day slightly lower, starting above $94,000, but regained momentum, peaking at $97,371 during today’s trading session.
The President-elect has expressed clear expectations from the Federal Reserve and has proposed a strategic Bitcoin reserve for the United States. However, crypto traders are worried since the central bank operates independently, and the incoming President will not influence its decision-making process.
Senator Cynthia Lummis’s proposed Bitcoin Act aims to establish a Strategic Bitcoin Reserve in the U.S., with dollar-denominated debt utilized to acquire 1,000,000 BTC, which is just under 5% of Bitcoin’s total fully diluted supply over the next five years.
Traders are keenly observing the “Trump effect” on Bitcoin’s price dynamics as the inauguration approaches next week.
Bitcoin analysts at 10X Research are exercising caution prior to Trump’s presidency. They note that market drivers seem to be weak, suggesting Bitcoin could remain within a range until mid-March.
Even as the post-election enthusiasm fades, the crypto industry, which contributed $238 million during the previous election cycle, has managed to secure 298 pro-crypto lawmakers in Congress. It remains unclear whether this will foster a reciprocal relationship that could affect Bitcoin’s price over the long term.
Decline in Institutional Demand for Bitcoin, Waning Sentiment
AmberData’s research into Bitcoin ETF activity indicates that institutional inflows to U.S.-based Spot Bitcoin ETFs have significantly decreased, with institutions likely halting new allocations amid the recent price dip. This trend reflects a risk-off sentiment among institutional investors.
The short-term caution from Bitcoin traders may transform into renewed confidence as BTC approaches the $100,000 milestone. Should Bitcoin stabilize above $95,000, this could significantly affect future inflows into Spot Bitcoin ETFs.
Research suggests that sustained inflows from key players such as BlackRock would signal a restoration of confidence, while ongoing outflows from 21Shares or Franklin Templeton may bolster a risk-off narrative. Traders should closely monitor ETF allocations to anticipate Bitcoin price movements and whether the asset consolidates or explores new levels in the weeks ahead.
Insights from Swissblock highlight a decline in BTC sentiment during the initial two weeks of January. As Bitcoin dipped to its $90,000 low, it raised caution among traders, leading to a decrease in the fear and greed index.
Analysis of On-Chain and Derivatives Data for Bitcoin
Data from Coinglass indicates a rise in open interest and options trading volume over the past 24 hours. As derivatives traders prepare for a possible upside ahead of Trump’s inauguration, any sudden BTC price fluctuations could lead to a spate of liquidations among long positions, exposing traders to negative impacts on their portfolios.
The optimism among derivatives traders, indicated by a long/short ratio surpassing 1 on exchanges like Binance and OKX, reflects expectations for a crypto-friendly Trump administration.
Analysis from the Bitcoin log chart and the market value to realized value (MVRV) ratio on 10X Research suggests that Bitcoin is nearing levels historically associated with profit-taking by “smart money,” which refers to large wallet investors and institutions. The MVRV ratio has hit 2.7x, a level often prompting profit-taking by BTC holders, as seen in past occurrences.
Traditionally, significant corrections in Bitcoin’s price occur when the MVRV ratio reaches 4x or 6x.
When combining on-chain analysis with the anticipated hawkish stance of the U.S. central bank for the coming months, there’s a significant likelihood of Bitcoin testing support levels at $76,000 and possibly $69,000, dipping below the $70,000 line.
The network realized profit/loss metric on Santiment aligns with the MVRV ratio and the waning sentiment among traders. Prolonged spikes in profit-taking correlate with corrections in Bitcoin’s price.
In a tweet on X, Keith Alan, co-founder of Material Indicators, alerted crypto traders about a potential decline toward Bitcoin’s 2021 all-time high of $69,000. He identifies $86,000 as a critical support level, followed by $76,000 as secondary support.
If Bitcoin experiences a sharp correction and fails to rebound from these support levels, it could fall below $70,000.
In an exclusive interview with Crypto.news, Sergei Gorev, head of risk at YouHodler, commented:
“Cryptocurrency valuations exhibit negative dynamics amid steadily declining trading volumes, with the medium-term trend remaining uncertain for traders. The situation is shifting rapidly.
BTC valuations have surpassed the $92,000 resistance level, potentially leading to a decline towards $73,000, where substantial support from the 200 SMA currently exists.”
Matteo Bottacini and the Crypto Finance team observe Bitcoin’s swift recovery from its dip below $90,000. The first significant inflection point for a higher range is noted at $96,800, with BTC staying resilient above the support level at $92,000.
Technical Analysis and Bitcoin Price Outlook
Bitcoin is presently consolidating around the $96,600 level. The daily BTC/USDT price chart illustrates two imbalance zones, or support levels for Bitcoin. The first zone is located between $81,500 and $85,072, while the second zone lies between $76,900 and $80,216.
The $70,000 level is crucial for Bitcoin and will become significant if BTC fails to bounce off the two identified support levels and continues to decline.
A 27% decrease from the current price could lead Bitcoin to touch the $70,000 support level, effectively erasing all gains made since November 5, 2024, thereby nullifying the post-election BTC rally.
The Moving Average Convergence Divergence (MACD) indicator displays red histogram bars positioned below the neutral line, indicating existing negative momentum in Bitcoin’s price trend. The Relative Strength Index (RSI) reads 51, which is close to the neutral threshold of 50.
Disclosure: This article does not constitute investment advice. The content and materials presented on this page are for educational purposes only.
