Bitcoin Rebounds as Rate Cut Sparks Revive... Expectations Rise Ahead of Trump's Inauguration [Kang Min-seung's Trade Now]

"Bitcoin, Bullish if it Breaks 108.5k"

"Potential for Decline if Below 102k"

Photo = Shutterstock

Bitcoin (BTC, Bitcoin), rebounding on the back of favorable U.S. inflation indicators, is showing an upward trend, hitting an all-time high just hours before the inauguration of U.S. President-elect Donald Trump (2 a.m. KST on the 21st). Market participants are keenly watching what Trump will say during the inauguration.

Market experts have analyzed that Bitcoin could show strength if it stably breaks the major resistance of $108,500, but if it falls below the support level of $102,000, the decline could widen.

As of 7:01 p.m. on the 20th, Bitcoin is trading at 161.69 million won on the Upbit KRW market, up 4.58% from the previous day (equivalent to $108,292 on the Binance USDT market). At the same time, the Kimchi Premium (price difference between overseas and domestic exchanges) is at 3.17%.

"Thank You CPI... Global Stock and Crypto Markets Rebound"

As U.S. inflation concerns have eased recently, bond yields have plummeted, and global stock and crypto markets have risen. Previously, the market had been adjusted by stronger-than-expected U.S. labor indicators, but a relief rally unfolded as both producer and consumer prices were contained recently.

On the 15th (local time), the U.S. Department of Labor announced that the core Consumer Price Index (CPI) for December rose 3.2% year-on-year and 0.2% month-on-month. Analysts say that as U.S. consumer prices met or slightly fell short of expectations, investor sentiment improved. Meanwhile, the core CPI, which excludes volatile energy and food prices, is known as the most important indicator for the U.S. Federal Reserve (Fed) when considering monetary policy.

With the improvement in inflation indicators, expectations for a rate cut are reviving in the market. CNBC reported on the 15th that "the core CPI for December slowed more than expected and recorded another bright inflation figure following the December Producer Price Index (PPI) announced the previous day." Bloomberg also reported, "As the U.S. core CPI for December finally eased, expectations have grown that the Fed will cut rates early."

Photo = CME FedWatch Capture

However, there are still concerns in the market about Trump-induced inflation. According to the Chicago Mercantile Exchange (CME) FedWatch as of 7 p.m. that day, the probability that the Fed will hold the benchmark interest rate at 0.25% this month is 99.5%. FedWatch predicts a 28.2% chance of a freeze in March and a 39% chance of a cut in May.

"Expectations for Trump's Inauguration Spread... Whale Investors Resume Accumulation"

U.S. Bitcoin Spot ETF Fund Inflow / Photo = Farside Investors

Bitcoin spot exchange-traded funds (ETFs) saw a net inflow of $1.86326 billion (about 2.6991 trillion won) last week (13th-17th). The recent introduction of strategic Bitcoin reserve bills by Texas and Arizona and news that the Trump administration plans to include several industry CEOs on the crypto advisory committee have heightened expectations. Meanwhile, at least 10 U.S. states are reportedly planning to introduce bills for Bitcoin reserves.

Bitcoin has recently undergone adjustments, and analysts say that many of the overheating factors have been resolved. On-chain analysis platform Glassnode stated in a research report, "After Bitcoin recently approached $108,000 and underwent adjustments, many of the market's overheating factors have been resolved," adding, "The current crypto market has relatively reduced declines and volatility." The report analyzed that the recent stress reduction in the market is due to the inflow of spot buying by ETFs and institutional investors.

The report added, "The degree of market anxiety in the recent adjustment was relatively low compared to past declines that appeared at the peak," and "Currently, Bitcoin is significantly above the average purchase price (average price) of short-term investors, which shows that the foundation of the bull market remains solid."

There is also an observation that Bitcoin has shown strong resilience despite inflationary pressures amid expectations for Trump's policies. Global crypto exchange Bitfinex stated, "Recently, Bitcoin has maintained resilience despite macroeconomic pressures," adding, "In the short term, volatility may intensify, but optimism about President-elect Trump's pro-crypto policies is expected to limit Bitcoin's losses and position Bitcoin strongly in the long term."

Whales holding 10 or more Bitcoins are accumulating again. Meanwhile, USDT and USDC supply is declining. / Photo = Santiment

There is also an analysis that whale investors are accumulating Bitcoin again. Crypto data analysis firm Santiment stated in a research report, "Whale wallets holding 10 or more Bitcoins have stopped inflows since December last year but seem to have resumed Bitcoin accumulation recently," adding, "These movements suggest that Bitcoin's recent rebound is a solid rebound." However, there is also a forecast that the market's liquidity may shrink somewhat in the future as the supply of Tether (USDT) and USD Coin (USDC) is declining.

Polymarket shows a 57% chance of Trump's strategic Bitcoin reserve. / Photo = Polymarket

Meanwhile, in the prediction market, there is an analysis that Trump's strategic Bitcoin reserve plan may materialize. As reports have emerged that President-elect Trump will designate crypto as a policy priority immediately after taking office, long-term optimism is also spreading. On this day, the crypto-based decentralized prediction platform Kalshi predicts a 61% chance that Trump will strategically reserve Bitcoin this year. On the decentralized prediction platform Polymarket, 57% are betting on the prediction that Trump will strategically reserve Bitcoin within the first 100 days of taking office.

"Bitcoin Expected to Rise Significantly if it Stably Breaks $108,500"

Market experts believe that if Bitcoin breaks the major resistance near $108,500, the potential for a rise is high, but if it falls below $102,000, the decline could intensify. Along with this, in the crypto derivatives market, there is an analysis that Bitcoin's implied volatility (IV) is expanding ahead of Trump's inauguration. IV is an indicator that predicts future volatility.

Bitcoin is breaking through short-term resistance lines, raising expectations for further rises. Ayush Jindal, a researcher at NewsBTC, stated, "Bitcoin is preparing for the next rise," adding, "If Bitcoin closes above $104,650 (based on the 1-hour candle), further rises are possible. It could then reach $106,000 and $108,500 in turn." The analyst added, "Bitcoin's major support levels are estimated at $102,000, $100,500, and $95,500, respectively."

Rakesh Upadhyay, a researcher at Cointelegraph, also stated, "The recent rise is due to expectations that the U.S. will adopt a strategic Bitcoin reserve plan," adding, "Bitcoin has signaled the end of the adjustment by breaking the resistance line of $102,724. Currently, buying pressure is dominant."

The analyst predicted, "Bitcoin is expected to rise to $108,353," adding, "This section could act as strong resistance. If it breaks through, it could rise further to $126,706." However, if Bitcoin gives up $97,533, downward pressure could increase, and it could continue to fall to $90,000.

While buying pressure for Bitcoin is rising in the market, there is also an analysis that a bubble is forming. Christopher Lewis, an analyst at FX Empire, stated, "If Bitcoin rises further from the current price level, it could reach $108,000," adding, "Significant resistance is expected from $108,000 to $110,000. If it breaks through $110,000, a larger rise is possible."

The analyst added, "The Trump administration may show a friendly attitude towards crypto, but there is also a possibility that no action will be taken," adding, "Currently, many traders seem to be preparing for the next rise by accumulating Bitcoin." Furthermore, there is a forecast that if Bitcoin breaks through $110,000 and continues its upward trend, it could stimulate investors' 'Fear of Missing Out (FOMO)' and reach $130,000 within this month.

Kang Min-seung, Bloomingbit Reporter minriver@bloomingbit.io