“Do not combat the Fed,” a market adage says, warning buyers from betting towards the U.S. Federal Reserve. For crypto merchants, it could be time for a brand new dictum: “Do not combat the President.”
On Monday, Trump Media and Expertise Group, the social media firm owned by President Donald Trump, disclosed a $2 billion funding in bitcoin
The announcement requires merchants to rethink the potential for BTC remaining bid by way of the year-end, doubtlessly invalidating the traditional knowledge that the bull market peaks a yr after the halving.
Halving cycle
The Bitcoin blockchain implements reward halving each 4 years, lowering the quantity of BTC paid to miners per block by 50%. The fourth halving, carried out in April final yr, decreased rewards to three.125 BTC. Since then, BTC’s value has surged from roughly $65,000 to almost $120,000.
The bull market is in full swing, however right here is the catch. Since its inception, bitcoin’s value has tended to observe a predictable rhythm – a four-year cycle centered round halving. Notably, costs are inclined to surge after halving, peaking 12-18 months after the occasion after which slipping right into a year-long bear market. Previous bull runs peaked in December 2013, December 2017 and November 2021.
In different phrases, if historical past is a information, BTC’s ongoing bull run might lose momentum earlier than the yr’s finish, paving the way in which for a protracted bear market.
This time could also be totally different
The notion that historical past should repeat itself in Bitcoin’s cycles requires reassessment this time resulting from a key differentiator – the presence of a pro-crypto president.
On one hand, the Trump-linked DJT is actively buying cash and including bullish stress available in the market. However, the Trump administration is including to the bullish market sentiment by way of favorable regulatory reforms, such because the current GENIUS Stablecoin Act.
Past conventional market cycles, Trump Media’s multi-billion-dollar Bitcoin guess indicators doubtlessly important bullish macro tailwinds. As pseudonymous observer EndGame Macro highlighted on X, “Nobody spends $2 billion on an extremely risky asset until they’re betting on a shift in your entire liquidity regime.”
Given President Donald Trump’s repeated public criticisms of Fed Chairman Jerome Powell and excessive rates of interest, this high-profile bitcoin acquisition by the President-linked group doubtless suggests a transparent strategic play: a guess on forthcoming charge cuts and a possible debasement of the U.S. greenback.
Trump has repeatedly criticized the Fed and its Chairman Jerome Powell for preserving rates of interest elevated at 4.25%, saying it is costing Individuals billions of {dollars}.
“In the event that they didn’t imagine the Fed was going to pivot, both by drive or design, then this may be reckless. As a result of if the Fed holds charges increased for longer and bitcoin corrects 40–60% in a deflationary flush, Trump Media would threat large mark-to-market losses and even liquidation relying on how this place is structured,” EndGame Macro famous.
Fed charge cuts and potential debasement of the greenback might solely add to the liquidity within the system, easing monetary situations for continued risk-taking in each conventional and crypto markets.
Goldman expects three charge cuts this yr
Strategists on the funding banking big Goldman Sachs anticipate the Fed to ship three-quarter basis-point charge cuts, ranging from the September assembly, in keeping with InvestingLive.
The anticipated easing cycle is contingent on inflation not flaring up once more, Goldman famous, including that the present developments level to a gradual however regular coverage pivot to charge cuts.
Learn extra: Trump Media Discloses $2B Bitcoin Stack
