Today, Bitcoin has come under strong pressure due to growing risk-averse sentiment and a corresponding decline in demand for risky assets. The cryptocurrency's price has plummeted below $100,000, with leading altcoins also showing sharp declines. This situation arises from two key factors: Trump and China. The US President has not established a Bitcoin reserve so far (contrary to his campaign promises) and nearly triggered a trade war with Colombia. Meanwhile, China released disappointing PMI data for the manufacturing sector.
On Friday, January 24, Donald Trump announced the formation of a task force to advise the White House on digital currency markets. Over the next six months, the task force is expected to develop a regulatory framework for cryptocurrency assets and evaluate the feasibility of creating a Bitcoin reserve.
On the one hand, this is positive news for the crypto industry, as the president officially acknowledged digital assets as a "key driver of financial innovation." On the other hand, the market had higher expectations—after all, the idea of forming a task force had already been priced in before Trump's inauguration. During his campaign, Trump promised to issue an executive order establishing a cryptocurrency reserve on his first day in office. However, as the saying goes, "Promises are like pie crusts—easily made, easily broken." This promise appears to be shelved indefinitely.
Other fundamental factors that previously supported BTC have already been factored into the market. For instance, traders reacted positively to Gary Gensler's departure as head of the Securities and Exchange Commission (SEC), as he was known for his tough stance on digital currencies. Trump replaced him with crypto advocate Paul Atkins. Additionally, Bitcoin benefited from the creation of a special cryptocurrency-focused task force within the SEC, led by Hester Peirce.
However, these decisions remain largely declarative. Trump has yet to confirm whether a cryptocurrency reserve will be created in the US, leaving the matter open for discussion. This leaves a 50% chance that the idea will either be delayed or rejected outright.
As a result, market participants locked in profits, causing BTC/USD to reverse downward and drop to $97,700 within hours. Other fundamental factors also played an indirect role in weakening risk appetite.
For example, today China released its manufacturing PMI, which disappointed investors with its "red" reading. From September to November, the index showed an upward trend, reaching 50.3. However, in December, it unexpectedly dropped to 50.1 (against forecasts of growth) and fell further to 49.1 in January. This puts the index in contraction territory for the first time since September last year and marks its lowest level since February 2024.
Additionally, China reported that the profits of major industrial enterprises (those with annual revenues exceeding 20 million yuan) declined by 3.3% in 2024. This is the third consecutive year of declining profits, following a 2.3% drop in 2023.
The "Colombian incident" also contributed to mounting risk aversion. On Sunday, Trump announced a 25% tariff on all imports from Colombia and proposed visa sanctions against Colombian officials. This was the US response to Colombia's refusal to accept military transport planes carrying deported migrants from California.
After Trump's announcement, Colombia's president declared that his country would impose reciprocal tariffs on US imports. However, following unofficial negotiations, both sides stepped back: the White House issued a statement confirming that Colombia would accept the migrants, and therefore, tariffs and sanctions would not be implemented.
In this context, a report from The Wall Street Journal is noteworthy. The article claims that Trump's advisors are unwilling to wait for negotiations or discussions with China. According to insiders, a "high-ranking White House official" stated that the US President is prepared to act "quickly and decisively," as seen in the Colombian case.
Thus, the current fundamental backdrop is not conducive to sustainable BTC growth. Corrections are likely to be used as opportunities to open short positions. Bitcoin has become a victim of inflated expectations regarding the cryptocurrency reserve amid broader risk-averse market sentiment.
Technical outlook for Bitcoin The support level is at $97,700 (the upper boundary of the Kumo Cloud on the D1 timeframe). If sellers break this level, the next target for BTC/USD will be $92,000 (the lower border of the Kumo Cloud on the same timeframe).
