Bitcoin investors may face a turbulent quarter ahead as two opposing Trump crypto trades come into conflict. The price of bitcoin has dropped for its worst week since September, largely due to concerns about President-elect Trump’s tariff plans and the dollar’s surge in bond yields.
Despite a pro-crypto Congress and White House, which had previously boosted investor sentiment, analysts now warn that other aspects of Trump’s agenda could work against prices. Head of research at Grayscale Investments, Zach Pandl, attributes the recent drop to market uncertainty about tariffs and their potential impact on bitcoin.
The dollar gained strength after Treasury yields hit 14-month highs, while bond yields spiked in response to stronger-than-expected payroll numbers. Analysts at Galaxy Digital note that risk takers have become increasingly sensitive to hot data on jobs and prices since the Federal Reserve’s hawkish cut in December.
However, some analysts remain optimistic about bitcoin’s long-term structural tailwinds, citing its correlations with global liquidity and a negative correlation with the dollar index. A trend in M2, a gauge of broad money supply, is also expected to lead to bitcoin retraction to the mid-$70,000 range sometime in the current quarter.
JPMorgan’s Kenneth Worthington notes that legislative processes on Capitol Hill can be slow, delaying positive policy impacts until the end of the year. As such, investors should expect a more macro-driven market over the next three months, with crypto legislation taking a backseat to non-crypto issues like immigration and taxes.
Source: https://www.cnbc.com/2025/01/10/two-trump-crypto-trades-are-in-conflict-and-could-derail-the-bitcoin-rally.html