• Bitcoin dropped to $89,900 on January 13, its lowest decline in two months
• James Toledano, COO at Unity Wallet, said one of the reasons for the drop is profit-taking after Bitcoin hit $108,000 in mid-December
• The inauguration of President-elect Donald Trump could spark renewed buying interest, Toledano said

Bitcoin fell below $90,000 for the first time in two months, dropping 3.6% in 24 hours as the market experienced selling pressure.

Data from CoinMarketCap shows that Bitcoin’s price dropped to around $89,900 on January 13. However, at the time of publication, it’s trading over $95,000.

According to James Toledano, COO at Unity Wallet, there are several reasons why Bitcoin’s price fell.

“The first is profit-taking, after hitting a peak of around $108,300 in mid-December, the market has seen a massive amount of it, particularly following the election of pro-crypto President-elect Donald Trump,” he said to CoinJournal, adding:

“Secondly, while institutional buying has continued contributing to Bitcoin reserves on exchanges hitting a seven-year low, trading volume remains subdued and this could simply be down to a seasonal slow-down.”

Macroeconomics weigh on the market

Recent analysis suggests that bleak economic expectations drive this bearish sentiment. This includes Trump’s tariff plans, the US Federal Reserve’s cautious approach to interest rate cuts, and a strong dollar.

Zach Pandl, head of research at Grayscale Investments, said to CNBC that:

“I would attribute the drawdown in the last two days largely to the market starting to appreciate that not every aspect of the Trump policy agenda is going to be positive for Bitcoin – and tariffs do introduce some new uncertainty.”

As questions surround Trump’s forthcoming policies, it may have dampened enthusiasm, which can “lead to short-term volatility for an already highly volatile asset,” said Toledano.

Some analysts believe Bitcoin can reach between $140,000 and $200,000 by mid-2025, so the current price action may appear concerning. Yet, it doesn’t necessarily signal the end of the bull run.

“The inauguration of President-elect Trump is just seven days away and could be a pivotal moment, with markets anticipating announcements of pro-crypto policies that might spark renewed buying interest,” said Toledano. “Institutional accumulation, as reflected in falling exchange reserves also supports the view that demand remains strong despite low trading volumes.”

• Bitcoin reached a high of $75,317 in the early hours of this morning
• In September, Bernstein analysts predicted Bitcoin to reach between $80,000 and $90,000 by the end of 2024 if Trump won
• Unity’s COO said to CoinJournal said it was “disingenuous” to say Trump winning the US election was the sole reason Bitcoin’s price went up

Bitcoin rose to a record high of over $75,000 early this morning as voting results signalled a Donald Trump win for the White House.

Data from CoinMarketCap shows Bitcoin achieved a high of $75,317 around 6:25 this morning. Before the election results started coming in last night, Bitcoin was trading at around $69,000.

However, as the evening progressed and into the early morning, Bitcoin continued an upward trajectory before reaching its new all-time high.

Bitcoin’s last all-time high took place in March when it reached $73,000.

Data from AP News shows Trump has taken 277 of the electoral results compared to Vice President and presidential candidate Kamala Harris’ 224.

Will the price rise continue?

While the new high comes amid the US election results, many will be wondering whether this upward movement will continue. In September, Bernstein analysts predicted that Bitcoin could reach between $80,000 and $90,000 by the end of 2024 if Trump won the presidential election.

According to James Toldeano, COO of self-custody wallet Unity, people need to realize that data based on the 2012, 2016, and 2020 US elections doesn’t reveal consistent patterns for the crypto market concerning election results.

“Some have looked at the 2020 election and seen the price rise from $13,760 prior to the election on November 1, to $19,698 following the election on December 1, and immediately asserted it was the election that drove the increase,” said Toldeano to Coinjournal.

In reality, Toldeano added, several factors contributed to the price rise, including US stimulus payments, increasing interest from companies like MicroStrategy buying Bitcoin, and people seeing Bitcoin as a safe investment during the Covid pandemic.

“While the election happened during this time, it’s disingenuous to say it directly caused the price increase,” he said.

In the long-term, it won’t be the election that moves the crypto market, but “broader macroeconomic events, technological advancements, shifting market sentiment, and factors outside of the next President’s control,” Toldeano explained.

Pro-crypto

Former US President Donald Trump has come across as more crypto-friendly compared to Harris.

Back in May, Trump promised that, if he was re-elected, he’d free Ross Ulbricht, the Silk Road creator. Ulbricht has already served 11 years in prison. In August, Trump also promised to make America the “crypto capital of the planet.”

In September, Trump became the first US president to use the Bitcoin network. He achieved this after sending a Bitcoin transaction at PubKey, a crypto-themed bar in New York ahead of his campaign rally in Long Island.

On the flip side, Harris has been muted about her stance on crypto despite saying her administration would support a crypto regulatory framework if she became the next US president.

“Incoming President Trump has the power to save crypto in the US where urgent change is needed,” said Jesper Johansen, CEO and founder of Northstake, an Ethereum staking marketplace, to Coinjournal.

“First amongst the new administration’s priorities should be to define staking as an opportunity for US investors,” Johansen continued. “The question still lingers: is staking a commodity or a security?”

Johansen said that $6 billion is sitting in Ethereum exchange-traded funds (ETFs), which aren’t being staked, meaning investors are missing out on economic opportunities. According to Johansen, this could be one of the reasons why the uptake of Ethereum ETFs hasn’t been as popular as Bitcoin ETFs.

“Once these core issues have been solved, changes are needed within the SEC to ensure that crypto is viewed as a vehicle of innovation, rather than something to be feared,” he added.

Ahead of the election, Trump said he’d remove Gary Gensler, chair of the US Securities and Exchange Commission (SEC); however, it remains to be seen whether this will happen because the SEC is an independent federal agency.

At the time of publishing, Bitcoin is trading at around $74,000.

The crypto trading volumes on major crypto exchanges tumbled massively in April. The trading volumes fell for the first time in seven months after Bitcoin price plummeted from an all-time high of $73,800, reported Bloomberg on Friday.

The situation continues in May as spot and derivatives trading volumes wane, causing Bitcoin and altcoins prices to dip further.

Trading Volumes Drop Amid Macroeconomic Concerns

Spot trading volume on major centralized exchanges such as Coinbase, Binance, KuCoin tumbled 32.6% to $2 trillion in April, as per data by CCData. In addition, derivatives trading volumes also dropped 26.1% to $4.57 trillion, for the first time in seven months.

Trading volumes skyrocketed earlier this year in response to the approval and listing of US spot Bitcoin exchange-traded funds (ETF) in January. The April 19 Bitcoin halving also failed to bring a sudden increase in BTC price or crypto market recovery, and the price fell below $60,000.

“Consistent with patterns observed in the last two cycles, trading activity on centralized exchanges typically slows in the two months following the Bitcoin halving event,” said Jacob Joseph, a research analyst at CCData.

Moreover, the sticky inflation and stagflation concerns faced by the U.S. Federal Reserve weakened market sentiment. Also, hotter CPI inflation data, escalation in the Middle East tensions, and potential bank run concerns pushed some uncertainty and fear into the market. The sentiment reversal caused negative net flows from the spot Bitcoin ETFs.

Binance and CME Group Revealed Low Trading Volumes

The world’s largest crypto exchange Binance saw its spot market share drop by 4% to 33.8% for the first time since September 2023 as trading volumes dipped significantly.

Moreover, CME Group, the largest Bitcoin derivatives exchange, saw crypto trading volume decline nearly 20% to $124 billion.

“Despite this, while trading activity on centralized exchanges has slowed down compared to its peak in March, it remains at a heightened level compared to the volumes recorded in the other months,” Joseph said.

BTC Price Awaits Another Breakout

CoinGape accurately predicted the recent crypto market recovery as Bitcoin chart patterns confirmed a breakout above the trendline. BTC price rebounded from $60,630 to $62,585 in a few hours on Thursday after a 3-day descending trendline was broken in a lower timeframe. The price hit a high of $63,446 today, with other altcoins such as ETH, SOL, XRP, DOGE, and SHIB also rebounding.

A breakout above the descending channel since mid-March will be bullish for BTC price to hit $100,000. This will be the confirmation of the post-halving Bitcoin price rally, triggering a broader crypto market rally.

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Varinder has 10 years of experience in the Fintech sector, with over 5 years dedicated to blockchain, crypto, and Web3 developments. Being a technology enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers. With CoinGape Media, Varinder believes in the huge potential of these innovative future technologies. He is currently covering all the latest updates and developments in the crypto industry.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.