Key Points
- Bitcoin and other altcoins experienced a drop in value following Donald Trump’s inauguration.
- Bitcoin’s price fell to $101,000 on January 23rd, and the prices of other popular coins also decreased significantly.
Following the inauguration of Donald Trump, the most crypto-friendly president in the US, Bitcoin and most altcoins saw a decrease in value.
On January 23rd, Bitcoin’s price fell to $101,000. Meme coins such as ai16z, Fartcoin, and Official Trump saw a decline of over 20%. Other coins like Lido DAO, Jupiter, Virtuals Protocol, and Hyperliquid were also heavily impacted.
Possible Reasons for the Crypto Retreat
There could be four potential factors for the ongoing retreat in the crypto market. First, economists anticipate the Bank of Japan to increase interest rates by 0.25% on Friday. This would elevate the official cash rate to 0.50%, the highest since 2008.
The last rate hike by the Bank of Japan happened in August last year, which resulted in a significant drop in cryptocurrencies and other assets. This was due to the unwinding of the Japanese yen carry trade. Hence, another rate hike might trigger a similar drop, although possibly smaller.
Secondly, Bitcoin and altcoins fell as traders anticipated the Federal Reserve’s interest rate decision next week. A hawkish tone could lead to further weakness in the crypto industry by pushing government bond yields higher.
Thirdly, the drop in crypto prices could be attributed to the fact that Donald Trump has not mentioned crypto since his inauguration. Additionally, he has not signed any executive order on cryptocurrency. This could be why the chances of him establishing a strategic Bitcoin reserve have fallen to 40% on Polymarket.
Lastly, the drop in coin values could be due to the common practice of buying an asset ahead of a major event and selling it when the event takes place.
Bitcoin’s Risky Double-Top Chart Pattern
Bitcoin has formed a risky double-top chart pattern at $108,100. This pattern, consisting of two peaks and a neckline, is typically a bearish reversal sign. The neckline in this case is at $89,305. By measuring the distance between the double-top and the neckline, the potential target for the coin is about $74,000.
As long as Bitcoin remains below the double-top pattern, it will be on edge. This, in turn, could affect other altcoins which often move in sync with Bitcoin.
If Bitcoin moves above the double-top point at $108,100, it would invalidate the bearish view and could potentially lead to further gains, possibly up to the psychological level at $110,000.
