Impact of Trump’s Inauguration on Bitcoin’s Future Movement
With Donald Trump’s presidential inauguration approaching on 20 January, the cryptocurrency market, particularly Bitcoin (BTC), is facing a critical juncture. One key metric to watch is the Short-Term Holders (STH) MVRV, which has reached a crucial level.
Potential for a Renewed Market Surge?
Currently, the STH realized price stands at $86,000, indicating a bullish sentiment for Bitcoin. Analyst Axel Adler from CryptoQuant believes that if demand remains strong leading up to Trump’s inauguration and the STH Realized Price reaches $90,000, it could trigger a significant uptrend for BTC. Adler highlighted that any positive policy decisions or announcements made by the president could provide a further boost to the cryptocurrency market.
An analysis of historical data shows that when the STH MVRV bounced at the mean level in January 2024, Bitcoin experienced an 88% surge to $72,000. This rally coincided with the approval of U.S. Spot BTC ETFs, suggesting that a similar scenario might unfold if Trump unveils favorable news that benefits the crypto sector.
Conversely, a drop below the mean level for STH MVRV has often led to a prolonged bearish trend or consolidation phase for Bitcoin. If the price falls below the STH cost basis, which was $88,000 at the time of reporting according to Glassnode, it could signal a loss of momentum among new investors, potentially triggering a market correction.
Therefore, maintaining the $88,000 support level before or after Trump’s inauguration could pave the way for a strong recovery. However, breaching this level might prompt panic selling among short-term holders, exerting additional downward pressure on Bitcoin’s price.
Options Market Sentiment and Predictions
Looking at the options market, traders are currently pricing in a slightly negative to neutral stance regarding Bitcoin’s performance around the time of the inauguration. This cautious outlook is evidenced by the 25-Delta Risk Reversal (25RR) indicator, which showed negative values for the 17th and 24th January expiry dates, indicating a preference for put options to hedge against potential downside risks.
For the 31st January expiry, the 25RR is marginally positive at 0.31, suggesting a modest inclination towards call options. Traders anticipate heightened volatility and probable price swings leading up to the event, followed by a period of stabilization post-inauguration.