(Kitco News) – Financial markets trended lower on Thursday as the return of inflation concerns – sparked by a hotter-than-expected Producer Price Index print – gave investors reason to pull back their ‘Trump Trade’ bets as the outlook for interest rate cuts became murkier.
Following the PPI release, Fed Chair Jerome Powell amplified concerns about the future of interest rate cuts after he told reporters that the central bank does not need to be “in a hurry” to lower rates further.
Stocks, which were already trending in the red before Powell’s comments, sank lower as traders took profits from the Trump-inspired run-up and elected to sit on the sidelines for the time being to see how things play out.
At the closing bell, the S&P, Dow, and Nasdaq all finished lower, down 0.60%, 0.47%, and 0.64%, respectively.
Spot gold bounced off a session low of $2,537/oz amid the decline in risk-on sentiment and, at the time of writing, trades at $2,564.70/oz for a decline of 0.3% on the day.
“Bitcoin (BTC) was hanging out in the 89,000 to 91,000 zone this morning before dropping to 88,300 after the US market open,” noted analysts at Secure Digital Markets. After a brief rally back to $89,780, the consolidation for BTC deepened, with bears now looking to test support at $87,000.
BTC/USD Chart by TradingView
“Since the elections, crypto ETFs have been raking in some serious inflows,” Secure Digital Markets said. “Right now, Bitcoin ETFs are the big players pushing BTC's demand, pretty much mopping up any sell-off from the long-term holders. Just this Wednesday, BTC ETFs bagged another $510 million, bringing the week's haul to a hefty $4.7 billion.”
In a positive development for the future of the bull rally, Secure Digital Markets analysts noted that “A peek at the CME's open interest tells us it’s pretty stagnant, signaling this rally's all about the spot market—which is a bullish sign.”
At the time of writing, Bitcoin trades at $88,255, a decrease of 0.54% on the 24-hour chart.
Bitcoin is headed to $180,000 this cycle
While the post-election bump for Bitcoin has cooled, its post-halving rally is still in the early stages, analysts say, and it could go well into the six-figure territory before it's all said and done.
“Our target is $180,000. We think we could reach that next year. That would be a 1,000% return from the bottom to the peak of this cycle,” said Matthew Sigel, head of digital assets research at VanEck, in an interview with CNBC. “That is still the smallest Bitcoin cycle by far.”
Previously, Sigel said that Bitcoin could reach $3 million by 2050 if it becomes a key asset in the global monetary system. While his $180,000 price point is significantly lower than that estimate, which is still decades from playing out, he suggested that in the near term, Bitcoin is in the early stages of a larger bullish trend that could lead to repeated all-time highs over the next two quarters.
“We think it’s just getting started,” he said. “As we expected, Bitcoin saw this high volatility pump after the election. We are now in blue sky territory, no technical resistance. It is not going to be a straight line, but we are up 30% so far, and a number of indicators that we track are still flashing green for this rally to continue.”
Sigel noted that a similar thing happened following the 2020 Presidential election when Bitcoin doubled within a few months after the final vote count was tallied.
This time around, BTC could perform even better, as Sigel said he anticipates “government support” under the Trump administration to have a positive influence on Bitcoin’s market performance.
Another factor supporting the bullish outlook is increasing institutional engagement thanks to the launch of multiple spot BTC exchange-traded funds (ETFs) in January.
“So the number of calls that I’m getting inbound from investment advisors who are at zero and looking to get to 1% or at 1% and looking to get up to 3% – These calls are starting to accelerate, and we think the flows are going to follow,” Sigel said.
To top it all off, Sigel noted that the retail demand that drove Bitcoin to blow off top, FOMO-driven rallies in past cycles has yet to manifest – citing Google searches for Bitcoin, which are still lower than they were four years ago – and said that once BTC is in price discovery mode and retail gets involved, “it tends to stay elevated for quite some time.”
Sigel’s prediction of a top in the second quarter of 2025 aligned with the outlook provided by TradingView analysts TradingShot, who said, “New evidence following the U.S. elections suggest that the aggressive nature of the past weekly rally can see BTC target even higher, more specifically the top of the Channel Up by Q2 2025.”
“As you can see, the price is currently between the 0.5 - 0.618 Fibonacci Channel range, which is technically a neutral zone,” TradingShot highlighted. “However, it is considerably below the 0.618 horizontal Fib level applied on a potential +198.10% rise (same as the Sep 2023 - March 2024 rally). This showcases the enormous upside potential that exists within this 2-year Channel Up.”
He noted that while the RSI indicator is close to reaching the overbought zone (>70.00), it was in a similar position “when the previous two Bullish Legs started was also while the price was below the 0.618 Fib (especially in the case of the October 20 2023 candle).”
“As a result, even though our 94500 medium-term Target stands, for the long-term we are targeting 140000, which is almost at the top of the 2-year Channel Up and marginally below a potential +198.11% rise,” he concluded. “Notice that the two lengthy corrections (green Rectangles) within the pattern started only when the RSI formed a Lower High below the overbought level (<70.00).”
Altcoin rotation leads to mixed performances
Altcoins traded mixed on Thursday, with roughly two-thirds of the tokens in the top 200 recording losses.
Daily cryptocurrency market performance. Source: Coin360
MANTRA (OM) bounced back from its declines on Wednesday to post a gain of 23.3%, while Ponke (PONKE) climbed 20.4%, and Act I: The AI Prophecy (ACT) gained 19.4%. Neiro (NEIRO) was the biggest loser, falling 10.4%, followed by losses of 8.6% and 8% for Cronos (CRO) and Echelon Prime (PRIME), respectively.
The overall cryptocurrency market cap now stands at $2.93 trillion, and Bitcoin’s dominance rate is 59.3%.
