The return to markets after the holidays and anticipation of Donald Trump’s inauguration as US president is building strong sentiment for bitcoin and the broader crypto market.
The asset is up 10% over the past week, retaking the $102,000 level late Monday and reversing most of the losses from early December. It fell from a high of nearly $109,000 on Dec. 17 to a local low of just under $92,000 on Dec. 30, briefly raising fears of a deeper fall.
The surge came as spot bitcoin exchange-traded funds (ETFs) listed in the US gained $987 million on Monday, their highest since Nov. 21, data from SoSoValue shows.
Fidelity’s FBTC led the inflow with $370 million, followed by BlackRock’s IBIT with $209 million and Ark Invest’s ARKB with $71 million. Nine of the twelve ETFs recorded inflows, with none showing outflows on a unique day for the cohort.
Anticipated crypto policies and Trump’s broader economic plan have returned positive sentiment to traders — driving BTC prices higher in the usual prelude to an altcoin rally.
“We believe demand for bitcoin is showing itself after a dovish Fed outlook in late December put the brakes on a Santa Claus rally,” Jeff Mei, COO at crypto exchange BTSE, told CoinDesk in a Telegram message on Tuesday.
“Now that traders have finished their vacations and are back at work, they have continued to buy Bitcoin, crypto, and stocks in a bullish trend as we approach Donald Trump’s inauguration,” Mei added.
Some traders are targeting the $109,000 level in the short term before a bullish trend is confirmed, setting the stage for higher prices.
“At the moment, the technical picture looks like a classic completion of the correction with the continuation of growth from the Fibonacci retracement level of 61.8% of the rally since the beginning of November,” shared Alex Kuptsikevich, FxPro chief market analyst, in a email. “This scenario will be confirmed if historical highs around $109,000 are confidently breached. At the same time, we expect Bitcoin’s growth to accelerate after the $100,000 mark.”
Fibonacci levels are a technical analysis tool to identify potential support and resistance points where price movements may pause or reverse. Some traders believe that tracking Fibonacci levels can offer predictive value in identifying key price levels — which can become a self-fulfilling prophecy that causes price reactions in the market.
As a result, market volatility is expected to remain low until Friday’s US Nonfarm payrolls (NFP) report, which some believe will kick off the new trading year with “decision makers fully back to work,” according to Augustine Fan, head of insights at SOFA.
Strong NFP data could strengthen the US dollar, potentially leading to higher interest rates, which could negatively impact risk assets such as stocks and bitcoin.
“However, the highest volatility event for the month was priced FOMC at the end of the month as economic statistics were priced to show signs of a ‘soft landing’ soon,” Fan added.
BTC was trading just above $101,600 in Asian morning hours Tuesday, up 2% over the past 24 hours. The broad based CoinDesk 20 (CD20)a liquid index that tracks the largest tokens by market cap rose 0.53%.
