In the days following the swearing-in of Donald Trump as the 47th president of the United States, the cryptocurrency market experienced significant volatility.
Bitcoin, the world’s largest and most well-known cryptocurrency, reached an all-time high of $109,071 on January 20, the day Trump was inaugurated.
However, by the following day, the rally appeared to cool, with Bitcoin trading at around $102,546.13. Despite the slight dip, Bitcoin still reflected a remarkable increase of approximately 9.5% in value for the month of January. While Bitcoin’s price movement was notable, it wasn’t just Bitcoin that experienced fluctuations in the market.
Trump’s own cryptocurrency, launched just days before his inauguration, also experienced significant volatility.
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Bitcoin’s Initial Surge and Sudden Decline
On the day of Trump’s inauguration, Bitcoin’s surge to a record high of $109,071 seemed to suggest that the market was responding to the anticipation of his policies and potential crypto-friendly stance. For months leading up to the inauguration, crypto investors had been speculating that Trump, known for his non-traditional approach to governance, might usher in favorable policies for the digital asset class. The excitement surrounding Trump’s entry into the White House was fueled by the hope that his administration would take a more progressive stance on cryptocurrencies, potentially providing regulatory clarity and facilitating a favorable environment for crypto innovation.
However, the initial euphoria quickly began to fade. By January 21, Bitcoin’s price had dropped to $102,546.13, cooling off from its peak the previous day. Despite this decline, Bitcoin remained up by approximately 9.5% for the month of January, indicating that the market was still experiencing a bullish trend compared to previous months. Crypto investors began to question whether the expectations surrounding Trump’s policies on digital assets would be met, leading to a correction in the price of Bitcoin.
Check also: What Makes Bitcoin and Cryptos a Good Alternative Payment Method
The Lack of Cryptocurrency Mention in Trump’s Inaugural Address
One of the key factors contributing to the cooling of the Bitcoin rally was the absence of any mention of cryptocurrencies in President Trump’s inaugural speech. Trump’s speech focused on a variety of topics, including trade tariffs, energy deregulation, immigration reform, and other domestic policies. However, there was no reference to digital assets, blockchain technology, or the regulation of cryptocurrencies.
This lack of attention to the cryptocurrency market left many investors feeling disappointed, as they had hoped that Trump’s first day in office would signal positive changes for the industry. Geoffrey Kendrick, the global head of digital assets research at Standard Chartered, expressed his disappointment, noting that “The digital asset market is disappointed to not have been mentioned in the inauguration speech or day 1 executive orders.” Kendrick further predicted that, without any positive news from Trump on digital assets, Bitcoin’s price might continue to decline, possibly even falling below the $100,000 mark.
For many investors, Trump’s inauguration had been seen as a potential turning point for cryptocurrency regulation and adoption. His reputation as an outsider and his previous public comments suggested that he might be more open to adopting a forward-thinking approach toward digital assets. The absence of any reference to cryptocurrency, however, created uncertainty, causing many investors to reassess their expectations.
Crypto Market’s Expectations of Regulatory Changes
The cryptocurrency market had been eagerly anticipating changes to U.S. policy under Trump’s leadership. Many in the industry believed that Trump might take a more relaxed approach to the regulation of digital assets, allowing for greater innovation and investment in the sector. There were also hopes that Trump would establish a strategic reserve of Bitcoin or create a more crypto-friendly regulatory framework.
Matthew Dibb, the chief investment officer at crypto asset manager Astronaut Capital, noted that the market’s expectations for Trump’s first day in office were high, but the reality had fallen short. Dibb suggested that the lack of immediate action on cryptocurrency policy was likely to result in a “sell-the-news” event, where investors, having priced in expectations of favorable policies, began to liquidate their positions in anticipation of further market volatility.
In addition to the uncertainty surrounding regulatory policies, there was also the question of how Trump’s administration would approach the broader financial landscape. The crypto industry has often faced challenges with regulatory uncertainty, and investors had hoped that Trump would take a different approach than the previous administration, led by President Joe Biden.
