Bitcoin reached an all-time high of $109,321 on Jan. 20, fueled by expectations of a crypto-friendly administration under President Donald Trump. Optimism stems from his campaign promises for regulatory clarity and pro-crypto appointments. However, data shows traders remain cautious about further gains.
Derivatives Show Modest Risk Appetite
Bitcoin futures premiums rose to 14% from 12% on Jan. 17, indicating moderate skepticism among traders. While this exceeds the 10% neutral threshold, it falls short of the 30% seen in previous bull runs. The Bitcoin options 25% delta skew at Deribit is at -6%, reflecting cautious optimism rather than overconfidence.
Is Trump’s Inauguration a “Sell the News” Event?
Following Bitcoin’s surge, the price dropped below $105,000, raising speculation that Trump’s inauguration could be a “sell the news” moment. Many of his pro-crypto measures have already been priced in, and uncertainties remain regarding the approval of a Strategic Bitcoin Reserve plan by Congress and the Senate.
US Fiscal Debt Concerns Weigh on Sentiment
Investor caution is also influenced by rising US fiscal debt concerns. The federal budget deficit for Q1 2025 surged nearly 40% year-over-year, with government debt financing costs projected to exceed $1.2 trillion. Treasury Secretary Janet Yellen warned of hitting the borrowing limit on Jan. 21, potentially triggering a government shutdown.
Despite uncertainty and profit-taking, there are no signs of increased bearish bets. Traders remain on the sidelines or expect sideways action, but a pro-crypto regulatory environment could still spark another rally.
Source: Cointelegraph
