Bitcoin Bounces Back After Weekend Slump, Eyes on Trump’s Crypto Policies

Bitcoin has rebounded after a tough weekend, where it experienced its biggest two-day drop since the U.S. election. After falling by nearly 3% on Saturday and Sunday, the cryptocurrency climbed back to $90,237 by Monday afternoon in London. The market appears to be adjusting to shifting views on how President-elect Donald Trump’s potential crypto policies might shape the industry.

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What Happened to Bitcoin Prices?

Bitcoin saw a major rally after Election Day, with prices breaking records. However, this surge left the market “overheated,” according to Tony Sycamore, a market analyst at IG Australia Pty. He explained that a lot of optimism about future policies had already been included in Bitcoin’s price, leaving room for a pullback.

Why Investors Are Wary

While Trump’s plans to support businesses have excited both stock and crypto markets, some concerns are creeping in. Investors worry about inflation risks from potential trade tariffs and government spending to fund tax cuts.

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Another factor affecting Bitcoin is the Federal Reserve’s policies. With the U.S. economy performing well, there’s less chance of major interest rate cuts, which could limit the extra money flowing into speculative investments like cryptocurrencies.

Trump’s Plans for Crypto

Trump has promised to create a more crypto-friendly environment, including a framework to make the U.S. a global hub for digital assets. He has even floated the idea of creating a national Bitcoin reserve. However, while these promises sound appealing, it’s unclear how quickly they can be implemented—or if all of them are realistic.

Why This Matters for the Crypto Market

If Trump changes the way crypto is regulated, it could have a big impact on the industry. Experts say his administration might replace the current tough enforcement approach with a more cooperative strategy. This could make it easier for banks to work with cryptocurrencies and could open the door to new types of investments, such as exchange-traded funds (ETFs) for coins beyond Bitcoin and Ethereum.

JPMorgan strategists believe clearer rules would encourage more investments in crypto-related businesses, mergers, and even public stock offerings. However, they remain skeptical about the idea of a U.S. Bitcoin reserve, calling it unlikely.

Investor Trends

After Election Day, Bitcoin ETFs (investment funds that track Bitcoin’s performance) brought in $4.7 billion in new money, pushing Bitcoin to an all-time high of $93,462. But the market cooled off quickly, with $771 million pulled out over just two days. Currently, Bitcoin ETFs hold $95 billion in total assets.

What’s Next for Bitcoin?

Bitcoin’s recent rebound shows its strength, but the market is still keeping a close eye on how Trump’s policies unfold. With the cryptocurrency world rapidly evolving, investors are watching for signs of regulatory clarity and other major developments that could shape Bitcoin’s future.

This recovery highlights Bitcoin’s resilience but also how much it depends on external factors like government policies and investor sentiment. For now, the market waits to see how Trump’s vision for crypto will play out.

Also Read: Should You Focus on Bitcoin or Dogecoin? Here’s What to Consider as Crypto Investor