Since President Trump was inaugurated on Jan. 20, bitcoin (BTC) has dropped from $109,000 to $80,000, making it a classic “sell the news” event. The correction has continued since the digital assets summit on Friday.
While the price action may dictate short-term bearishness, bitcoin bulls could view it as a long-term positive catalyst, as the U.S. administration has shifted from a hostile stance under the previous administration to a more favorable one. However, the lack of immediate buying pressure suggests short-term weakness.
A similar price action occurred during the much-anticipated launch of U.S. spot bitcoin ETFs in January 2024. From October 2023 to January 2024, bitcoin surged from $25,000 to $49,000—over a 40% rally. However, the launch marked a local top, as the price subsequently declined by 20% over the following weeks before eventually reaching new all-time highs above $73,000 in March.
This time, after President Trump won the U.S. election in November, bitcoin rallied 60%, hitting an all-time high of $109,000 in January before undergoing a nearly 30% correction.
The common pattern in both instances is that bullish news triggered a local top in bitcoin’s price, followed by a significant correction. The next variable is will bitcoin start to move higher after this correction has finished, with a lot depending on the macro landscape.