- Bitcoin shows technical strength despite recent range-bound trading between US$91k and US$95k while major altcoins like Ethereum and Solana face steeper weekly declines.
- Analysts are divided on whether Trump’s upcoming inauguration will trigger a “buy the rumor, sell the news” event or catalyse Bitcoin to new all-time highs.
- Growing concerns about stagflation and persistent inflation could impact Bitcoin’s performance as analysts like Chris Kuiper warn about potential second wave inflation risks amid structural fiscal deficits.
Bitcoin appears stuck trading in a range between US$91k (AU$147.8k) and US$95k (AU$154.3k) for the past few days. Although BTC has made gains of around 1.3% in the past 24 hours, it’s still down 2.7% on the weekly time frame.
Related: Crypto Sell-Off Accelerates with Deepening Economic Fears
The rest of the crypto market is no different, with most altcoins also treading water. Ethereum (ETH) is down 8% week-on-week, while Solana (SOL) even dropped 9.8% during the same time.
One Week to Trump Inauguration
With just seven days until Donald Trump is officially moving back into the White House, some analysts believe we’re starting to see the “pre-Inauguration Day rally” kick off soon. Investors hope that Trump will mention or otherwise acknowledge crypto on inaugural day on January 20.
In a recent note to investors, Swissblock analysts posit the question whether this will “turn into a ‘buy the rumor, sell the news’ event, leading to a Bitcoin correction before or during that day?”
Or if a new all-time high is on the cards instead:
Or will the price finally break out of this range, reaching a new all-time high?
SwissblockEither way, it won’t be an easy couple of days for the OG crypto, because there are substantial macro factors ahead which could influence the path over the short-term.
Although BTC is looking good from a technical standpoint, the analysts pointed out that the US inflation data and other macroeconomic factors are still potentially causing volatility with the potential to spook investors.
Stagflation, Chance and Risk for Bitcoin
Despite recent economic data suggesting robust US job growth, concerns about persistent inflation, high US debt levels, and possible stagflation persist.
Stagflation – the combination of high inflation with stagnant growth in the economy – could lead to both opportunities and challenges for Bitcoin. Its impact on Bitcoin’s price would largely depend on how investors view Bitcoin (as a safe haven or a risk asset) and how governments and central banks respond to the economic conditions.
Related: Spot Bitcoin ETFs See Massive Outflows as First Anniversary Rolls Around
Analysts at The Kobeissi Letter pointed to “more evidence of stagflation”, they warned:
We have rising prices with a weakening labor market. Stagflation is here.
The Kobeissi LetterFidelity Digital Assets research director Chris Kuiper added that “continued large and structural fiscal deficits” make it easy to picture a second wave of inflation.
If this trend continues and the outcome is anything worse than a ‘soft landing’ and a historically typical recession, it could quickly escalate into stagflation.
Chris Kuiper, Fidelity Digital Assets
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