The month of January has typically been a quiet period for Bitcoin [BTC], but the year 2025 is defying expectations with a 9% increase. However, a notable decrease in Open Interest and negative CME premiums indicate that traders are reducing their exposure to BTC.
Given that the U.S. economy is the primary catalyst, the question arises: Is this cautious behavior a temporary measure or the beginning of a significant change?
Current Situation in the U.S.
A critical group to monitor at present is U.S. investors. The Coinbase Premium Index (CPI) has been negative for a consecutive seven days, aligning with BTC’s drop from $104K to $102K.
Amid ongoing de-risking, with more than $3 billion in Futures positions being closed, the buying pressure remains subdued.
With the looming FOMC meeting, traders are refraining from high-risk leverage trades, which is preventing any substantial increase in open positions for the time being.
While inflation appears to be manageable and Trump is advocating for lower oil prices, the market remains uncertain about the execution of these policies. Traders are opting to wait on the sidelines until there is more clarity.
Historically, Bitcoin has shown positive performance when oil prices decline. If lower oil prices contribute to curbing inflation, the Fed might consider reducing rates. This could be a significant factor to monitor in the coming days.
Bitcoin Performance in January
Between Trump’s inauguration, MicroStrategy’s consistent accumulation of Bitcoin, and a 10-month peak in ETF volume, Bitcoin experienced a noteworthy 9% surge in January.
These fundamental drivers are creating a foundation for a potential shift in the market dynamics. In case optimistic outlooks falter, the $87K–$90K range could serve as a robust support level, attracting significant players to acquire BTC.
This scenario echoes the price decline in December, when BTC dropped from $106K to $89K within a span of two weeks following a 0.2% increase in inflation.
During that period, MicroStrategy made three substantial Bitcoin acquisitions, each exceeding a billion dollars, reinforcing their commitment to Bitcoin.
Therefore, despite the cautious market sentiment, a severe Bitcoin ‘crash’ seems improbable.
If any unexpected developments occur, it might be related to the Fed deviating from anticipations. However, with Trump advocating for reduced rates, the market appears ready to withstand any potential upheavals, offering a sense of reassurance in the year 2025.