Bitcoin surged to $95,000 in low-liquidity trade hours Sunday, after US president Donald Trump’s major announcement. Markets were ablaze in speculation after the announcement of a US Crypto Strategic Reserve including Bitcoin (BTC), Ethereum, XRP, Solana, and Cardano. Some traders saw this as an important moment that would cement crypto’s position in the U.S. Financial System, but others were hesitant, wondering if the market rally could continue beyond its immediate response. QCP Capital, a company that is skeptical of the market’s potential, was among those traders.
What is the best time to play Bitcoin in politics?
It is hard to ignore the timing of Trump’s announcement. Risk assets have been under pressure for the last week as markets around the world reacted to negative economic and geopolitical events. Trump’s newly imposed tariffs The shaky Ukraine/Russian peace talks have created more uncertainty. The volatility of the stock markets intensified and affected sentiments across all financial sectors.
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Bitcoin showed signs of weakness even before Trump announced his decision. This sudden move was in stark contrast with the recent downward trend risk assets were following.
QCP Capital highlighted What is the strategy of the government behind this? “For a president who thrives on being the market’s hero, last week’s risk asset performance performance was anything but inspiring. His slew of new tariffs and shakier than expected Ukraine-Russia peace talks rattled investor confidence. So, while the timing of the SBR was somewhat unexpected, the political calculus was clear — Trump needed a win before his approval ratings starts slipping, a metric he likely takes very personally.”
Questions remain, however, as to whether or not this announcement represents a real shift in the policy towards long-term adoption of cryptos or if it is simply an announcement made at a good time to stabilize sentiment before more economic pressure appears. QCP Capital, despite Bitcoin’s impressive rise in the past weekend that excited many traders and investors, is still not convinced this move represents a significant breakout. According to the firm, there are several market signals which indicate that Bitcoin has not been rescued yet.
QCP Capital cautioned: “Are we back in the game? Not quite. BTC is still trading near the bottom of its multi-month range and frontend crypto vols are still relatively elevated with both majors still reflecting a Put Skew till end-March. The VIX is also elevated, signaling broader market unease in risk assets overall, particularly after the recent tariff escalations from the US administration.”
Lessons From The Past: The ‘Xi Candle’ Comparison
For seasoned traders, the weekend’s price action is reminiscent of a historical event in the crypto market—the infamous Xi Candle of 2019. Cold Blooded Shiller – a leading crypto analyst – took to X and compared the weekend’s price action to a historic event in the cryptocurrency market: The infamous Xi Candle of 2019.
Cold Blooded shiller reflects on the Xi Candle recalled Bitcoin’s long downtrend was reflected in the fact that it had reached new lows and market sentiment was at a record low. After a seemingly random announcement, Chinese president Xi Jinping said that China would embrace blockchain technology. Bitcoin’s price soared 40% within two days as a result of a short squeeze. At the time, traders believed that it was the start of a bullish crypto era.
“Sentiment was very quick to adjust. You’ll be surprised (not) to hear that it didn’t take much back then to shape the whole mindset of Twitter into the positives and ability for the market to now have an infinite bid,” He wrote.
But the excitement was only short-lived. China reversed its pro-blockchain rhetoric a few weeks later. It implemented new crackdowns against crypto exchanges, and warned investors of the dangers associated with digital assets. Bitcoins’ gains slowly faded. The price action reversed in the month following and eventually dropped below levels before announcement.
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“We did not immediately reverse the candle. It actually took many weeks to do that, which made it all the more painful for those trading it or those who had their bullish bias,” Cold Blooded Shiller was recalled.
Both the Xi Candle announcement and Trump’s Crypto Reserve are similar. The Xi Candle and Trump’s Crypto Reserve announcement are strikingly similar. Both followed extended periods of weakness in the markets, saw a dramatic change in sentiment nearly overnight, created a bullish narrative which was broadly embraced by market participants. Trump’s decision will either lead to a long-lasting trend or, just like the Xi Candle in the past, will fade away, trapping buyers who bought at the peak.
The Key Events to Watch This Week
Bitcoin’s future growth and ability to hold gains will be determined by key developments on the macroeconomic front.
The latest Purchasing Managers’ Index data will be released on Wednesday. This is a key economic indicator which could have a significant impact on expectations about Federal Reserve policy. The PMI could indicate economic weakness and increase speculation of possible rate reductions, which would be positive for Bitcoin. However, stronger-than-expected data could reinforce the view that the Fed will maintain its restrictive policy stance, potentially pressuring crypto and equities alike.
The Non-Farm Payrolls report (NFP), a major employment indicator, is released on Friday. This has traditionally influenced the market’s sentiment. A positive jobs report may indicate that the economy is still resilient, and reduces the chances of near-term interest rate cuts. This could have a negative impact on Bitcoin. A weaker than expected report would fuel a risk-on attitude, which could further support BTC.
On Friday the White House Crypto Summit It is anticipated that the US Crypto Strategic Reserve will provide crucial insights. BTC’s price could increase if there are tangible announcements. The market might react negatively if there is no meaningful direction from the event. This could lead to an increase in volatility.
QCP Capital said it best: “Just when we think Trump has exhausted his cards, he may still have more surprises up his sleeve. Will this be the push toward that elusive all-time high? We’ll be watching.”
BTC was trading at $90.352 as of the time this article went to press.
Featured image was created with DALL.E chart by TradingView.com
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Source: www.newsbtc.com
