Bitcoin recovers from the biggest drop since the US election
Kyiv • UNN
Bitcoin fell 3% over the weekend but recovered to $92,000 after the US election. Trump has promised to create a friendly regulatory framework for cryptocurrencies, but experts doubt that all the promises will be realized.
Bitcoin has recovered from the biggest two-day drop since the US election amid volatile trading, reflecting changing assessments of the impact of US President-elect Donald Trump's policies, Bloomberg reports, UNN writes.
Details
The digital asset fell by almost 3% on Saturday and Sunday before rising again to $92,000 as of 7:05 a.m. Monday in London (9:05 a.m. Kyiv time). Trump has made several pro-cryptocurrency promises, but questions remain about the timing and feasibility of all of them, such as creating a bitcoin reserve in the United States.
Bitcoin has become "overheated" after a record rise since the November 5 election, and "a lot of good news has been priced into the price," Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note.
Although Trump's business-friendly stance has inspired investors in US stocks and cryptocurrencies, some of the optimism is tempered by inflationary risks due to the prospect of trade tariffs and deficit spending to finance tax breaks, the publication points out.
Investors are lowering their expectations for interest rate cuts by the Federal Reserve in the face of a robust US economy, which could be an obstacle for cryptocurrencies, as liquidity conditions are said to affect speculative demand for digital tokens.
Trump has promised to create a friendly regulatory framework for digital assets, build a strategic bitcoin reserve, and make the US the global center of the industry. Formerly a cryptocurrency skeptic, the president-elect changed his tactics after digital asset companies spent significant funds during the election campaign to promote their interests, the publication notes.
Cryptocurrency legislation could be approved in the near future under the Trump administration, which would facilitate a shift from enforcement-based regulation to a more collaborative approach, JPMorgan Chase & Co. strategists led by Nikolaos Panigirtzoglou wrote in a note.
Banks could get more exposure to digital assets, the team said, and markets are more hopeful about the approval of cryptocurrency exchange-traded funds that invest in tokens, in addition to the two main ones, Bitcoin and Ether.
According to the strategists, regulatory clarity will be a tailwind for venture capital investments, mergers and acquisitions, and initial public offerings. But the creation of a bitcoin reserve in the United States is a "low probability event," they added.
U.S. spot bitcoin ETFs attracted net inflows of $4.7 billion from November 6-13, the day the original cryptocurrency set an all-time high of $93,462, data compiled by Bloomberg show. About $771 million exited the products on Thursday and Friday, leaving the group with total assets of $95 billion.
