Bitcoin’s ongoing technical correction may soon be coming to an end, with many traders anticipating a potential surge in prices as the market moves toward a bullish trend.
The reopening of markets after the holiday season, along with mounting excitement over Donald Trump’s upcoming inauguration as U.S. president, is fueling growing optimism for Bitcoin and the wider cryptocurrency market. Bitcoin has risen 10% in the past week, reclaiming the $102,000 level late Monday, effectively recovering nearly all of the losses it incurred in early December. The cryptocurrency had dropped from a high of nearly $109,000 on December 17 to just below $92,000 by December 30, triggering brief concerns of a more substantial downturn.
This recent rebound is coinciding with a major influx of capital into U.S.-listed Bitcoin exchange-traded funds (ETFs), which saw nearly $1 billion in inflows on Monday, according to data from SoSoValue. This marks the largest daily inflow since November 21. The FBTC ETF, managed by Fidelity, saw the largest influx with $370 million, followed by BlackRock’s IBIT with $209 million and Ark Invest’s ARKB with $71 million. Nine of the 12 Bitcoin ETFs saw inflows, highlighting the positive sentiment sweeping through the market.
Trump’s expected policies on cryptocurrency, coupled with his broader economic initiatives, have helped restore investor confidence and are driving Bitcoin prices upward, with many expecting this to be a precursor to a rally in altcoins.
“There’s clearly a resurgence in demand for Bitcoin after the Federal Reserve’s downbeat outlook in December put a damper on the holiday rally,” said Jeff Mei, COO at crypto exchange BTSE, in a Telegram message to CoinDesk. “With traders back from their vacations, we’re seeing renewed buying activity in Bitcoin, crypto, and stocks as we near Trump’s inauguration,” Mei added.
Some traders are targeting the $109,000 mark in the short term, viewing this as a potential trigger for a more significant bullish move that could push prices even higher.
“The current technical setup suggests that the correction is coming to an end, with growth likely to resume from the 61.8% Fibonacci retracement level of the November rally,” said Alex Kuptsikevich, Chief Market Analyst at FxPro, in an email. “If Bitcoin breaks through the $109,000 level confidently, it would confirm the bullish outlook, and we expect the price to accelerate past the $100,000 threshold.”
Fibonacci retracement levels are widely used by traders to identify key support and resistance levels, which are seen as potential turning points for price movements. Many traders believe that these levels can influence market behavior, creating a self-fulfilling prophecy when prices approach these points.
Market volatility is expected to remain muted until the U.S. Nonfarm Payrolls (NFP) report is released on Friday, which some analysts view as the catalyst for the official start of the new trading year, as decision-makers return to full activity, according to Augustine Fan, Head of Insights at SOFA.
If the NFP data is stronger than expected, it could bolster the U.S. dollar and lead to higher interest rates, potentially putting pressure on risk assets like Bitcoin and stocks.
“The most significant volatility event for the month is likely to be the Federal Open Market Committee (FOMC) meeting at the end of January, where the data is expected to show signs of a ‘soft landing’ for the economy,” Fan added.
As of Tuesday morning in Asia, Bitcoin is trading just above $101,600, up 2% in the past 24 hours. The broader CoinDesk 20 index, which tracks the largest cryptocurrencies by market cap, is up by 0.53%.
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