Bitcoin Price Stabilizes Above $95,000 Amidst Macro Headwinds and Trump Effect

Bitcoin trades above $96,000 on Tuesday, January 14, recovering from a flash crash under $90,000 and macroeconomic headwinds last week. Large scale profit-taking could push BTC to the support zones on the weekly chart, close to the $70,000 level.

Bitcoin Market Movers and the Trump Effect

President-elect Donald Trump’s inauguration on January 20 is a key event that traders are closely watching. Trump’s pro-crypto picks for Securities and Exchange Commission Chair, AI & Crypto Czar, and an expectation of pro-crypto regulation have intertwined Bitcoin’s price trend with U.S. macro moves.

Bitcoin started the day lower, opening above $94,000, and covered lost ground, reaching a high of $97,371 in today’s trading session. The President-elect has been clear on his expectations from the Federal Reserve and promised a strategic Bitcoin reserve for the U.S.

The Bitcoin Act proposed by Senator Cynthia Lummis would establish a Strategic Bitcoin Reserve in the U.S., and dollar-denominated debt would be used to buy 1,000,000 BTC, or just under 5% of the total fully diluted supply of Bitcoin in the next five years.

Institutional Appetite for Bitcoin Cools Down, Sentiment Deteriorates

AmberData research on Bitcoin ETF dynamics shows that institutions have drastically scaled back their inflows to U.S.-based Spot Bitcoin ETFs and likely paused new allocations amidst the recent price retreat. The move signals a risk-off behavior by institutional investors.

Research suggests that sustained inflows from major players like BlackRock would signal restored confidence, while continued outflows by 21Shares or Franklin Templeton might reinforce a risk-off narrative. Traders should monitor ETF allocations closely to predict Bitcoin price trends.

Data from Swissblock insights maps the deterioration of BTC sentiment in the first two weeks of January. As Bitcoin slipped to its $90,000 low, it raised caution among traders and sent the fear and greed index lower.

Bitcoin On-Chain and Derivatives Data Analysis

Coinglass data shows that Open interest and options trade volume has climbed in the past 24 hours. As derivatives traders position themselves for a continued upside ahead of Trump’s inauguration, sudden BTC price moves could trigger a slew of long liquidations and leave the traders exposed to the negative impact on their portfolio.

The current optimism among derivatives traders, evident from the long/short ratio (greater than 1) on exchanges like Binance and OKX, can be attributed to an expectation of a crypto-friendly Trump regime.

The Bitcoin log chart and Market value to realized value ratio on 10X Research shows that the token is reaching levels that are historically associated with profit-taking by “smart money,” meaning large wallet investors and institutions.

Expert Commentary on Where Bitcoin is Headed

Keith Alan, co-founder of Material Indicators, warned crypto traders of a potential decline to Bitcoin’s 2021 all-time high of $69,000. Alan considers $86,000 as a key support level and the $76,000 level as the secondary support.

Been waiting for a deeper correction, and it may be developing now, however I do expect another Trump Pump at some point relative to Inauguration Day. Of course, must watch to see if it becomes rocket fuel for a rally or a sell the news event.

Sergei Gorev, head of risk, YouHodler, noted: “Cryptocurrency quotes also show negative dynamics against the actively decreasing volumes of cryptocurrency trading, as the medium-term vector of movement is still unclear to traders.”

Technical Analysis and Bitcoin Price Forecast

Bitcoin is currently consolidating around the $96,600 level. The BTC/USDT daily price chart shows the formation of two imbalance zones, or support levels for Bitcoin. The first one is between $81,500 and $85,072, and the second lies between $76,900 and $80,216.

A 27% drop from the current price could push Bitcoin to test the $70,000 level as support. This could erase all gains in Bitcoin since November 5, 2024, meaning post-election BTC rally would be wiped out.

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