January 20, 2025, is cited by analysts as a key date for the crypto market. Donald Trump’s inauguration could shape market expectations, resulting in two possible scenarios — optimistic and pessimistic. Expert Axel Bitblaze has analyzed the main factors that will determine the market’s direction.
Bearish Scenario
Inflation Risks
Trump’s plans to impose new tariffs and bring manufacturing back to the U.S. may accelerate inflation. In response, the Federal Reserve (Fed) could maintain a tight monetary policy, negatively impacting liquidity availability for the crypto market.
Overblown Expectations
Discussions about a “Bitcoin reserve” by the Trump administration might not meet the market’s hopes. This could lead to disappointment among investors and prompt profit-taking.
Time Constraints
The limited window before the next congressional elections may restrict the scope for major reforms, including those concerning stablecoin and DeFi regulations.
Weakness in Altcoins
If both Bitcoin (BTC) and Ethereum (ETH) stagnate, altcoins with high retail investor participation could start losing ground.
Bullish Scenario
Reaction to Tariffs
According to Axel Bitblaze, experience shows that Trump’s previous tariffs did not significantly drive up inflation. Should the global economy remain balanced, markets may interpret this as a positive signal.
Liquidity Inflows
Refinancing the U.S. national debt — some $7 trillion — could force the Fed to ease policy. Ending quantitative tightening (QT) and cutting interest rates would foster favorable conditions for crypto growth.
Global Stimuli
China is already actively stimulating its economy, which could prompt other nations to do the same. In an environment of ample global liquidity, crypto assets typically perform well.
Strengthening the Bitcoin Narrative
Even if the idea of a “Bitcoin reserve” remains mere rumor, the mere discussion could enhance BTC’s appeal, driving up its price due to limited supply.
Promising Niches
If new liquidity inflows materialize, the growth leaders will likely be Bitcoin and key narratives such as artificial intelligence, real-world asset (RWA) tokenization, DeFi, and consumer platforms. However, if the Fed retains a hardline stance, weaker altcoins could lose traction, while stronger projects remain afloat.
Related Reading
- Crypto Industry Enters “Infinity Age”: Bernstein’s 2025 Predictions
- Crypto Market Could Peak in Q1 2025, Says Arthur Hayes
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.