Bitcoin is nearing the end of a technical correction, and some traders are predicting that this could soon trigger a major bullish rally.
As markets reopen following the holiday season, and with the anticipation of Donald Trump’s upcoming inauguration as U.S. president, optimism is building for Bitcoin and the broader cryptocurrency market. Bitcoin has surged 10% over the past week, reclaiming the $102,000 level late Monday and reversing nearly all of its losses from early December. After hitting a high of nearly $109,000 on December 17, Bitcoin fell to just below $92,000 by December 30, sparking temporary concerns of a deeper pullback.
The recent rally comes amid strong inflows into U.S.-listed Bitcoin exchange-traded funds (ETFs), with $987 million flowing into these funds on Monday—the highest daily inflow since November 21, according to SoSoValue data. The FBTC ETF by Fidelity led the charge with $370 million in inflows, followed by BlackRock’s IBIT at $209 million, and Ark Invest’s ARKB at $71 million. Nine of the 12 Bitcoin ETFs tracked by SoSoValue saw inflows, underscoring the growing confidence in Bitcoin from institutional investors.
Trump’s anticipated economic and crypto policies have helped spark positive sentiment, boosting Bitcoin’s price and paving the way for a possible rally in altcoins as well.
“There’s a noticeable uptick in Bitcoin demand following the Federal Reserve’s cautious outlook in late December, which dampened expectations for a holiday rally,” said Jeff Mei, COO of crypto exchange BTSE, in a Telegram message to CoinDesk. “Now that traders are back from their vacations, we’re seeing renewed buying activity in Bitcoin, crypto, and stocks as we approach Trump’s inauguration,” Mei added.
Traders are targeting the $109,000 mark in the short term, with the expectation that this level could signal the start of a more sustained bullish trend, possibly pushing Bitcoin even higher.
“The technical setup suggests that the correction is nearly complete, with the price likely to resume its upward momentum from the 61.8% Fibonacci retracement level of the rally that began in November,” explained Alex Kuptsikevich, Chief Market Analyst at FxPro, in an email. “If Bitcoin breaks through the $109,000 level with conviction, this will confirm the bullish scenario, and we expect the rally to accelerate beyond $100,000.”
Fibonacci retracement levels are often used by traders to identify key support and resistance points, which can lead to significant price movements. Some traders believe these levels are predictive, influencing price behavior as they are approached.
Market volatility is expected to stay relatively low until the release of the U.S. Nonfarm Payrolls (NFP) report on Friday, which many see as the trigger for the new trading year as major decision-makers return to work, according to Augustine Fan, Head of Insights at SOFA.
Stronger-than-expected NFP data could push the U.S. dollar higher, potentially leading to increased interest rates, which could negatively impact risk assets like Bitcoin and stocks.
“The most volatile event this month is likely to be the Federal Open Market Committee (FOMC) meeting at the end of January, where economic data may show that the economy is on track for a ‘soft landing,’” Fan added.
Bitcoin is currently trading just above $101,600 as of Tuesday morning in Asia, up 2% in the last 24 hours. The broader CoinDesk 20 index, which tracks the largest cryptocurrencies by market capitalization, has gained 0.53%.
