- Donald Trump-linked jitters have pulled back crypto markets.
- Those fears are “overblown,” analysts say.
Bitcoin’s not had a great start of 2025, but its fortunes are about to change.
That’s according to the London Crypto Club’s latest newsletter, in which the authors predict that a wave of liquidity will flood the market and spur the price to a record.
“All roads lead to Bitcoin. This bull market is not close to being done,” wrote David Brickell, head of international distribution at FRNT Financial, and former forex trader Chris Mills.
The comments come as the crypto market retracted in early January.
Investors have reconsidered riskier investments including Bitcoin amid signs of a strong US economy that signal a hawkish stance from the Federal Reserve, as well as Donald Trump’s looming presidency and the potentially inflationary policies he might introduce.
However, key to Brickell and Mills’ argument is the idea that this fear is misplaced.
Overblown Trump narratives
Bitcoin’s price tends to rise when the US central bank cuts interest rates as it incentivises investors to tap riskier assets like equities and crypto.
That’s partly why the price jumped when the Fed slashed rates in September and November.
Trump’s election win contributed to the rally. The industry expects him to deliver on his pro-sector pledges once he returns to the White House.
However, analysts have also said his comeback has contributed to Bitcoin’s slump — the price has dropped below $100,000 at the start of 2025.
His promises to introduce high tariffs on US trading partners fuel “overblown” inflation concerns, Brickell and Mills said.
While his America First approach promises to bring production back to the US, it could also be seen as inflationary. His first term mostly saw him swap some low-cost production hubs for places like Vietnam and India, they write.
“Markets are overestimating both the likelihood of tariffs or at least the size of the tariffs imposed — Trump goes big as a negotiation tactic and typically delivers much less,” they wrote.
Bullish jobs market data released last week also contributed to the Fed’s reluctance to cut rates.
Brickell and Mills argued that those data points were just the symptoms of a pre-election spending “sugar high,” which will start to fizzle out soon and more rate cuts to follow.
Liquidity damn breaking
The analysts also expect the Fed to “flood the market with liquidity” — potentially to the tune of $750 billion — as the government tries to keep its debt low.
China’s attempts to boost its ailing economy will also pump more liquidity into the market, Brickell and Mills said.
When that happens, Bitcoin’s price will surge, they say.
Crypto market movers
- Bitcoin is down 3.8% over the past 24 hours to trade at $91,101.
- Ethereum is down 6.4% to trade at $3,060.
What we’re reading
- Singapore labels Polymarket illegal gambling, restricts site access ― DL News
- Where to park your profits this cycle ― Milk Road
- Bitcoin Slides for 3rd Day, Erasing Year’s Gains ― Unchained
- What you missed this week ― Milk Road
- Think tank presses Meta to join ‘Bitcoin renaissance’ after lukewarm Microsoft and Amazon bids ― DL News
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.
