Bitcoin’s bull run faces test amid potential Trump-era crypto policies – Bitfinex

Bitcoin (BTC) registered a significant recovery in the past week, jumping from the $90,000 price area to a new all-time high at $109,357.07 on Jan. 20. However, a new Bitfinex Alpha report warns that BTC’s upward momentum faces potential headwinds, as “sell-the-news” trading behavior looms large.

Bitcoin’s rebound followed a steep decline to $89,698, which triggered $818 million in liquidations on Jan. 13. Of this, $592 million was attributed to long positions. 

Despite the scale of the pullback, Bitcoin’s ability to hold above key support levels highlights the ongoing strength of its price trends relative to traditional markets.

A crucial support-resistance level for Bitcoin lies in the behavior of short-term holders, which are wallets holding BTC for less than 155 days. The Short-Term Holder Realized Price (STH-RP) currently stands at $88,400 and is a critical metric in determining market stability. 

During last week’s correction, Bitcoin’s price found support near this level, preventing further downward pressure. Historically, short-term holders defend their average cost basis as a buffer against deeper losses.

Additionally, the report said that President Donald Trump’s inauguration could potentially be a “sell-the-news” event. Market anticipation surrounding possible executive orders favoring crypto regulation or taxation may lead to profit-taking by traders who position themselves ahead of the event, which could exacerbate any short-term price corrections.

The report also highlighted the delicate balance in Bitcoin’s current market structure. While aggressive spot demand has bolstered the crypto, a failure to sustain upward momentum could breach key support levels, triggering additional sell-side pressure.

Spot market and institutions holding the line

The recent recovery was driven predominantly by spot market activity, as evidenced by an aggressive rise in the Spot Cumulative Volume Delta (CVD). This metric, which tracks the net difference between market buy and sell orders, indicates strong buyer demand. 

Notably, a significant share of this buying originated from US-based exchanges, mirroring patterns seen during institutional purchases by players like MicroStrategy and activity related to exchange-traded funds (ETF).

The dominance of spot market buyers, particularly from institutional and short-term holders, pointed to Bitcoin’s position as one of the best-performing risk assets since the US election results in November. 

However, the report cautioned that robust buying often depleted bids, creating potential pullback conditions.

Maintaining a bull market range

Bitcoin remains in the typical bull market range, with its current price trading approximately 18% above the STH-RP cost basis. However, the report emphasizes maintaining this momentum to avoid near-term stress. 

If Bitcoin dips below the $88,400 support level, short-term holders could panic, amplifying sell-offs across the wider market, especially in altcoins.

In the broader context, Bitcoin’s ability to recover will depend on the interplay between institutional buying, spot market activity, and macroeconomic events. 

While the Trump inauguration presents short-term risks, the overall market sentiment remains cautiously optimistic due to consistent demand from both retail and institutional players.

The report added that Bitcoin’s resilience offers hope but advised traders to remain vigilant as the market navigates a potentially volatile period.

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