Crypto Market on Fire: The Shocking Reasons Behind...

The crypto market is up today amid increasing optimism of a crypto-friendly regulatory environment ahead of US President-elect Donald Trump’s inauguration.

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The total crypto market capitalization is up 1.04% over the last 24 hours to $3.53 trillion on Jan. 6, two weeks before Donald Trump’s inauguration. The overall trading volume has also jumped 5.8% on the day to $92.7 billion, signaling intensifying demand-side pressure.

Bitcoin BTC$95,966, the largest cryptocurrency by market capitalization, is closing in on the $100,000 level again, up 1.1% over the last 24 hours to trade at $99,533, 8% below the $108,268 all-time high set on Dec. 17.

Ether ETH$3,365.39, the second-largest crypto, climbed about 1% to trade at $3,673 at the time of publication.

Crypto market performance Jan. 6. Source: Coin360

Let’s look at the factors driving the crypto market up today.

Crypto rallies ahead of Trump’s inauguration

United States President-elect Donald Trump is set to take office on Jan. 20 for his second term, and the market is already shifting ahead of the much-awaited inauguration.

There’s a growing belief that Trump’s administration will foster a more crypto-friendly environment. Industry executives, investors, and developers are optimistic about regulatory changes that could benefit the crypto market.

Such optimism has been displayed by Ripple CEO Brad Garlinghouse, who says, “75% of Ripple’s open roles are now US-based,” attributing the changes to the incoming Republican administration and Trump’s pro-crypto rhetoric.

Source: X/Brad Garlinghouse

In a Dec. 31 announcement, Mining company Hive Digital said it would relocate its headquarters from Vancouver, Canada, to San Antonio, Texas in the US, adding:

“The new administration under President-elect Donald Trump has demonstrated a more pro-Bitcoin stance.”

ARK Invest founder Cathie Wood said that the expected deregulation under Trump’s second administration will create a more business-friendly regulatory environment for crypto companies.

Wood also reiterated her optimistic outlook for the market, predicting an uptick in corporate mergers and acquisitions over the next four years, maintaining her prediction that Bitcoin’s price will exceed $1 million by 2030.

Favorable macroeconomic conditions

General market conditions, including easing inflation, which makes risk-on assets like cryptocurrencies more attractive, and a broader market optimism in response to economic indicators, could contribute to a further rise in the crypto market.

10x Research’s founder Markus Thielen predicted that with the market experiencing a “positive start” to the year, a favorable Consumer Price Index (CPI) print on Jan. 15 could see a rally ahead of Trump’s inauguration.

“A favorable inflation print could reignite optimism, fueling a rally into the Trump inauguration.”

Bitcoin’s projected path for January 2025. Source: 10x Research 

“However, this momentum may wane, with the market likely retreating somewhat ahead of the FOMC meeting on Jan. 29,” Thielen said.

Market participants are pricing in an 88.8% possibility of the US Federal Reserve maintaining the benchmark borrowing cost within the 4.25% to 4.5% range following the FOMC’s Jan. 29 meeting.

Target rate possibilities for the Jan. 29 Fed meeting. Source: CME Group

The core Personal Consumption Expenditures (PCE) price index reading, which is the Fed’s preferred measure of inflation, is also expected at the end of January.

Strengthening crypto market technicals

From a technical standpoint, TOTAL—the crypto market cap of all cryptocurrencies—trades inside a prevailing bull flag pattern, which hints at an uptrend continuation.

The rally to $3.7 trillion on Dec. 17, followed by a sharp drop toward $2.05 trillion and a subsequent return to the current level of $3.44 trillion, has resulted in a potential bull fag on the daily candle chart.

There’s overhead resistance at the flag’s upper boundary of $3.58 trillion. A weekly candlestick close above this level would signal a breakout, clearing the path toward $4 trillion.

TOTAL crypto market cap weekly candle chart. Source: Cointelegraph/TradingView

But, the ultimate technical target for this chart pattern can go as high as $6.06 trillion. Such a move would represent a 76% ascent from the current level.