- Historical market performance data suggests that the bullish momentum in the cryptocurrency market may wane following the inauguration of President-elect Donald Trump in January 2025.
- Analysts are divided on the future of Bitcoin, with some predicting a potential 30% correction post-inauguration before an uptrend resumes.
Recent market data indicates that the cryptocurrency sector may be nearing its peak as anticipation grows around Trump’s inauguration. Trump’s victory during the elections, digital assets like Dogecoin (DOGE) and Solana (SOL) saw a bullish surge; this raises the question of whether a similar event could take place once it is inaugurated on January 20, 2025.
Historical trends reveal that the stock market and cryptocurrencies perform strongly in the weeks immediately preceding and following a presidential election. Take, for example, Tesla (TSLA) stock; Shares of JPMorgan (JPM) jumped 14% and 9%, respectively, after the election. The ripple effect hit crypto, propelling Bitcoin to its all-time high of $99,834, the highest price Bitcoin has paid since its launch in 2009.
Market psychology and speculation
The behavior observed in the market is particularly pronounced when the new president is a member of the Republican Party. A study by TS Lombard, formerly known as Lombard Street Research, points out that the Republican Party is generally considered more business-friendly, with policies and initiatives that its supporters say boost economic growth. As a result, this party affiliation tends to generate increased post-election enthusiasm among investors.
Scott Chronert, A U.S. equity strategist at Citi provided insights in a November report, suggesting investors should tactically reconsider their positions during a post-election rally. He noted that if the S&P 500 Index were to rise above 6,100 by the end of the year, a target that implies an increase of about 5% from Election Day, investors might want to take advantage of the moment to make profits.
This advice illustrates the importance of timing in investment strategies, especially during periods of market volatility. Strong starts, like that of 2024, translate into positive end-of-year performance for the markets. Adam Parker of Trivariate Research supports this view, pointing out that since 1943, markets have remained strong in November and December after making gains of 20% or more in the first ten months.
Analysts predict crypto market will slow down after Trump inauguration
Adam Parker pointed out that a notable market correction could be on the horizon, with a potential “sell the inauguration” consensus gaining traction. Bitcoin could face a 20-30% decline before it can surpass the $100,000 mark. Concerns for 2025, such as tariffs and unstable trade relations, as well as expected fewer interest rate cuts, could hamper growth despite the potential benefits of lower taxes and of the regulations.
Adding to this perspective, Ryan Lee, the chief analyst at Search Bitget, notes that the price of Bitcoin could fall by as much as 30%, which could take it back to around $70,000 before resuming its upward movement. Nonetheless, the long-term outlook appears promising, supported by growing institutional interest and historical trends that indicate recovery is achievable.
Currently, Bitcoin (BTC) is priced at $95,577reflecting a slight decline of 0.49% over the past 24 hours while posting a gain of 1.85% over the week. As we look ahead to January, when Trump returns to office and Gary Gensler may be out, potentially paving the way for crypto-friendly regulations, we will have to wait and see if these anticipated corrections will occur.
