Bitcoin experienced significant price fluctuations on the day of Donald Trump’s inauguration, reaching a peak of $109.5K before dropping back to $100K.
Following the inauguration, the market seemed cautiously optimistic, with BTC Options expert Tony Stewart hinting at anticipated market volatility leading up to the January 21st expiry.
Stewart noted, “The BTC 21st Jan expiry is still 100% priced in 12 hours, suggesting that the inauguration speech did not dominate market sentiment. Investors remain wary of potential fluctuations.”
An analysis showed that the Implied Volatility (IV) for the January 21st Options expiry was close to 100%, indicating heightened uncertainty and the likelihood of price swings post-inauguration.
As of the latest update, the IV had decreased to 71%, while the IV for Wednesday Options expiry stood at 77%, pointing towards expected price fluctuations within the next 48 hours.
Despite the prevailing uncertainty, there was a premium for call options (bullish positions), evident in the positive 25-Delta Risk Reversal (25RR).
Uncertainty Surrounding U.S. Bitcoin Reserves
The market unease might have been triggered by the absence of any mention of cryptocurrencies in President Trump’s initial executive orders.
Just before the inauguration, the probability of the U.S. holding Bitcoin reserves within the first 100 days surged to 48% on Polymarket, propelling Bitcoin’s price to a new all-time high of $109K.
However, this likelihood dropped to 32% afterward as it became evident that crypto assets were not a top priority, at least at the onset of the administration.
Bitcoin Magazine’s David Bailey speculated that there could be an executive order establishing a Strategic Bitcoin Reserve (SBR) within the first 100 days. Nonetheless, he suggested that the regulatory framework might take until the mid-term elections to materialize.
While Bitcoin’s price retraced below $108K, it held steady above crucial moving averages around $100K, showcasing resilience despite uncertainties surrounding the U.S. SBR. A breach below these averages could potentially push Bitcoin down to $94K or even lower ranges around $90K.
Conversely, a strong upward momentum could push Bitcoin towards $120K, especially if there are positive developments regarding the U.S. SBR plans.