The beginning of 2025 has been marked by a blend of unpredictability and resilience in the world of cryptocurrencies. Amidst Federal Reserve confrontations, a Consumer Price Index report, the emergence of two new meme coins, Trump’s reentry into the spotlight, and a bold declaration from the Securities and Exchange Commission (SEC), Bitcoin[BTC] has managed to maintain stability above $100K – showcasing its robustness.
However, the road ahead remains uncertain. Trump’s shift from a supportive stance towards cryptocurrencies has led to them being marginalized in his recent executive orders, setting Bitcoin up for a challenge.
Investors are now confronted with a critical decision: Should they proceed cautiously or double down with unwavering belief?
Which direction will prevail?
In the realm of crypto, every move triggers a reaction. The TRUMP meme coin has plummeted by 44% currently – a deliberate response to Trump’s omission of any mention of crypto in the slew of 42 executive orders he signed on his first day back in office.
Bitcoin has not escaped the repercussions. Instead of experiencing a “Trump-induced surge” propelling BTC above $110K, its momentum has tapered off. Presently, investors are adopting two strategies: either patiently waiting for a favorable opportunity to enter the market or steadfastly holding onto their investments, anticipating an impending rally.
The 3.56% spike in Bitcoin following the SEC’s initial favorable move towards crypto indicates that confidence still perseveres. However, the duration of this sentiment remains uncertain. Owing to the market’s volatility and Trump’s lack of action in the crypto sphere, skepticism is gradually seeping in, causing long-term holders to reassess their positions.
The amount of Bitcoin held by long-term investors has dwindled to a three-year low, plummeting from 16.3 million to 14.5 million. This sharp decline of 11% since the last election year signals a trend where these investors have cashed in on substantial profits, reaping returns as high as 50%.
This development is unsettling because while short-term investors chase quick profits, long-term holders are essential for maintaining Bitcoin’s stability. A loss of confidence among them could pave the way for a potential crash in Bitcoin’s value.
If the newly formed government fails to deliver on its commitments, the market might witness a significant upheaval, potentially shifting the sentiment from ‘confidence’ to ‘caution.’
The Quest for a Trigger in Bitcoin’s Performance
With declining confidence among long-term holders, the market is in dire need of a fresh catalyst to absorb the surplus liquidity.
Despite the fading Trump wave, Bitcoin exchange-traded funds (ETFs) are observing substantial inflows of billions. Meanwhile, MicroStrategy (MSTR) continues its robust purchasing streak.
Institutional funds are instrumental in maintaining Bitcoin’s value above $100K, unwavering in their conviction, while individual investors are spearheading the momentum, fueled by the fear of missing out (FOMO).
Nevertheless, time is running short. The crypto market still places its bets on Trump’s pledges, and with a Federal Open Market Committee (FOMC) meeting merely a week away, the stakes have been raised.
If no concrete actions are taken, the possibility of significant volatility causing Bitcoin to plummet below $100K looms.