A weekly look at the most important news and moves in crypto, and what’s on the horizon in digital assets.
Welcome back to Distributed Ledger. This is Frances Yue, crypto reporter at MarketWatch.
Bitcoin
BTCUSD
hit a record at $109,225 early Monday ahead of the inauguration ceremony of President Donald Trump, who is expected to run a pro-crypto administration.
The largest cryptocurrency by market capitalization pulled back slightly to around $104,384 on Wednesday afternoon, though it is still up 11.7% so far this month.
Where is bitcoin heading next? I caught up with Martin Leinweber, director of digital-asset research and strategy at MarketVector Indexes, an index provider.
Find Frances Yue on X to share your thoughts on the Trump administration and the crypto sector.
Potential catalysts
Even though bitcoin hit a record high above $109,000, it has been mostly consolidating in the range between $92,000 and $106,000, MarketVector’s Leinweber said in a phone interview.
The crypto market is waiting for its next catalyst, whether it’s an announcement about a U.S. strategic bitcoin reserve, or the pending approval of any exchange-traded funds investing in smaller cryptocurrencies other than bitcoin and ether
ETHUSD
, Leinweber said.
Trump repeatedly vowed to build a strategic bitcoin reserve in the U.S. during his campaign, which ignited the hopes of many crypto enthusiasts.
While the president has not yet detailed any specific plans for the reserve, one possibility is for the U.S. to stop selling bitcoin it seized from illicit activities, noted Joe McCann, chief executive at crypto investment firm Asymmetric, in a recent interview. The U.S. government has periodically conducted sales of seized crypto, which has put downward pressure on crypto prices.
Meanwhile, Sen. Cynthia Lummis, a Wyoming Republican, introduced a bill last year which, if passed, would instruct the Treasury Department to buy 1 million bitcoin over time.
Crypto traders have yet to fully price in the potential establishment of a bitcoin strategic reserve, McCann said. On prediction-market platform Polymarket, participants are pricing a 34% likelihood that Trump will create a bitcoin reserve within his first 100 days in office.
Crypto bulls are also hoping to see the approval of exchange-traded funds investing in altcoins, or cryptocurrencies that are smaller than bitcoin and ether in market cap. Regulators have only approved bitcoin and ether ETFs in the U.S. so far.
Several asset managers have submitted applications for ETFs investing in solana
SOLUSD
, XRP
XRPUSD
, dogecoin
DOGEUSD
and even Trump’s own meme coin, though many crypto enthusiasts have expressed disappointment towards Trump’s meme-coin launch.
Digital-asset enthusiasts are hoping that the newly established crypto task force at the U.S. Securities and Exchange Commission, announced on Tuesday, could accelerate the approval of such ETFs, according to Matt Mena, crypto research strategist at digital-asset manager 21Shares.
“A more structured and regulated approval pathway for crypto ETFs could unlock new capital inflows from institutional and retail investors who have long lacked a familiar, regulated investment vehicle for these assets,” Mena wrote in emailed comments to MarketWatch.
What could be next?
From a technical perspective, bitcoin’s next target is in the range of $118,000 to $120,000, noted Leinweber.
Katie Stockton, founder and managing partner at Fairlead Strategies, said that while the short-term momentum has improved for bitcoin, short-term overbought conditions have returned based on several technical indicators.
“We would hold off on adding exposure barring a decisive breakout above $108,300,” Stockton wrote in emailed comments. A decisive breakout refers to a situation where an asset’s price moves beyond a level with significant momentum, instead of just touching and pulling back from that level.
