Bitcoin continued to trade in the green this week, recording a rise of more than 7%. The currency reached more than $102,000 on Friday, reflecting a clear upward momentum. This rise was supported by positive US economic reports that affected risky asset markets such as Bitcoin.
US economic data was one of the main reasons behind Bitcoin’s rise. Recent figures, including inflation and employment data, recorded a decline in inflationary pressures. Reports also showed that inflation has slowed, making Bitcoin an attractive investment option amid expectations that the Federal Reserve will not raise interest rates sharply in the near future.
Trump’s inauguration impact on the market
As the inauguration of US President-elect Donald Trump approaches on January 20, some analysts expect it to have significant impacts on financial markets. Trump has historically boosted financial markets with pro-business policies, such as tax cuts and regulatory cuts. Market expectations indicate that these policies may boost risky assets such as Bitcoin in his second term. However, market enthusiasm has begun to wane as the inauguration approaches, with expectations for Bitcoin initially more bullish late last year.
A report from K33 asserts that “Bitcoin’s sell-off on the inauguration has become less convincing,” noting that the market has preempted the excitement seen in November and into mid-December. However, Bitcoin remains in a strong position, with much speculation about whether it could move towards new targets as political conditions in the US change.
Based on current performance, Bitcoin is still expected to trade at higher levels in the coming days. This upward momentum could continue until Trump’s inauguration, which could reinforce pro-market fiscal policies.
Economic data plays a key role in Bitcoin’s support
Economic data is a key part of Bitcoin’s support. On Tuesday, data from the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) rose 0.2% in December, lower than expected. The core index, which excludes volatile food and energy prices, also held steady, suggesting that inflation may be on its way to easing. This news helped to dampen expectations of sharp interest rate hikes, which boosted riskier assets like Bitcoin.
Furthermore, the Consumer Price Index report confirmed the positive trends in the US economy, showing inflation declined more slowly than expected. Continuing this trend, Bitcoin closed above the $100,000 level. Meanwhile, positive data from the US retail sector boosted hopes that the economy will remain on a stable path.
Institutional Demand and Market Sentiment
While institutional demand is seeing some recovery, it remains relatively weak compared to previous weeks. The Bitcoin spot exchange-traded fund (ETF) market saw inflows of around $887.3 million, a slight improvement from last week’s $312.8 million. However, institutional inflows still need to increase further for Bitcoin to maintain its upward momentum.
Traders should also keep an eye on some key on-chain metrics, such as the accumulation of wallets holding more than 10 BTC. These wallets have started to resume accumulating BTC after a period of stagnation. This trend is usually associated with long-term increases in Bitcoin prices. However, there is also a decline in the number of small wallets, indicating that some retailers have sold their coins in recent periods, which could represent an opportunity for whales to buy Bitcoin at lower prices.
Bitcoin Support and Resistance Levels
Technically, indicators suggest that Bitcoin may continue its bullish momentum in the coming days. After retesting the support level at $90,000, the price rose by 5.77%, closing above $100,000. Currently, the Relative Strength Index (RSI) indicates that Bitcoin is heading towards the upside, as it crossed 61, which is above the neutral average of 50.
If Bitcoin continues its bullish momentum, the next target could be reaching the high recorded on December 17, 2024 at $108,353. When the Moving Average Convergence Divergence (MACD) indicator crosses the bullish trend, it is a strong signal to buy the coin.
However, if Bitcoin faces a pullback in the near future, the price may return to test the $100,000 support level again. If the price drops below this level, we may witness another decline to $90,000.
Social Analysis and Its Impact on Bitcoin
Conversations on social media are one of the important factors that affect the markets. As traders monitor cryptocurrency conversations, the surge in interest in trending coins is often felt. However, markets have shown no signs of a “fear of missing out” (FOMO) towards meme coins recently, reflecting a more sustained interest in Bitcoin and other high-value intrinsic currencies.
This shift suggests that markets may be entering a healthy growth phase in crypto, with greater interest in high-value assets rather than speculative ones. If this trend continues.
Bitcoin Outlook
Additionally, institutional moves in the Bitcoin market could push prices higher, provided institutional inflows increase.
Bitcoin’s outlook remains positive in the long term, with technical indicators and economic data pointing to a continuation of the bullish momentum. If the positive sentiment from institutions and supportive economic data continues.
