(Bloomberg) — Bitcoin rebounded from its biggest two-day decline since the U.S. election in choppy trading that reflects mixed assessments of the impact of newly elected President Donald Trump’s policy agenda.
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Digital assets fell nearly 3% on Saturday and Sunday before rising back to $92,000 at 7:05 a.m. in London on Monday. Trump has made several pro-crypto pledges, but there are open questions about the timeline for implementation and whether they are all feasible – such as setting up a US Bitcoin stockpile.
Bitcoin became “overheated” after record-breaking advances since Election Day on November 5, and “there is a lot of good news built into the price,” IG Australia Pty Market Analyst Tony Sycamore wrote in a note.
Inflation risks
While Trump’s business-friendly stance has boosted both US stock and crypto investors, some of the optimism is tempered by inflation risks from the prospect of trade tariffs and budget deficits to finance tax cuts.
Investors are lowering expectations for Federal Reserve rate cuts in a solid US economy, a potential hurdle for crypto as liquidity conditions could impact speculative demand for digital tokens.
Trump has promised to create a friendly regulatory framework for digital assets, establish a strategic Bitcoin stockpile and make the US the global center of the industry. The president-elect, once a crypto skeptic, changed course after digital asset companies spent heavily to further their interests during their election campaigns.
Line shift
Crypto legislation could soon be passed under the Trump administration, sparking a shift from regulation by enforcement to a more collaborative approach, strategists at JPMorgan Chase & Co wrote. led by Nikolaos Panigirtzoglou in a note.
Banks could have more opportunities to dabble in digital assets, the team said, and markets are more hopeful of approving crypto exchange-traded funds that invest in tokens other than just the top two, Bitcoin and Ether.
Regulatory clarity would boost venture capital investments, mergers and acquisitions and IPOs, according to strategists. But the creation of a US Bitcoin reserve is a “low probability event,” she added.
U.S. spot Bitcoin ETFs attracted net inflows of $4.7 billion between Nov. 6 and Nov. 13, the day the native cryptocurrency hit a record high of $93,462, according to data compiled by Bloomberg. About $771 million left the products Thursday and Friday, leaving the group with total assets of $95 billion.
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