January 17, 2025 (Globalinvestorideas.com Breaking Stock Market News and Commentary) Investorideas.com, a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.
In a context of volatility, Bitcoin has staged a remarkable rally, breaking past the $100,000 barrier once again, generating renewed optimism in the cryptocurrency market. This bullish momentum, with a weekly growth exceeding 8%, is supported by a confluence of factors ranging from political developments to macroeconomic trends.
One of the key drivers of this rally is the imminent inauguration of President Trump, scheduled for January 20. His well-known favorable stance toward digital assets has sparked expectations of pro-crypto policies, including the possibility, according to reports, of an official declaration of Bitcoin as a reserve. This speculation has resonated with investors, boosting demand and Bitcoin’s price. The potential designation of Bitcoin as an official reserve by President Trump could represent a watershed moment for legitimizing digital assets globally.
Institutional capital flows also play a critical role. Significant inflows into Bitcoin ETFs were recorded yesterday, totaling USD 626 million, signaling a growing interest from institutional investors in this asset. These capital inflows strengthen the bullish outlook and validate the increasing adoption of Bitcoin as a legitimate asset class.
From a macroeconomic perspective, recent U.S. economic data, which indicate a relative easing of inflationary pressures, have fueled expectations of a less restrictive Federal Reserve. The Fed is expected to hold current interest rates in the short term, with potential signs of a more accommodative monetary policy in the second half of 2025. This macroeconomic environment favors non-yielding assets like Bitcoin by reducing the opportunity cost of holding them.
The prospect of a less restrictive Fed in 2025 creates a favorable environment for assets like Bitcoin, which benefit from lower interest rates, alongside a reduced cost of capital supporting risk-associated assets.
Additionally, the expiration of Bitcoin options contracts, valued at USD 2.2 billion, with open interest concentrated at the strike price of USD 120,000, reinforces optimistic expectations for the short and medium term.
In summary, the current Bitcoin rally is supported by a combination of political, institutional, macroeconomic, and technical factors. While risks remain, particularly if political expectations do not materialize, the overall outlook points to a strengthening of Bitcoin’s price in the short and medium term.”
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