Potential and Pitfalls: How Trump’s Bitcoin Holdings could Spark or Stifle a Crypto Surge

Key Points

• Bitcoin’s value has dropped by 4.05% recently, despite an executive order expected to boost its performance.
• Investor skepticism, particularly from U.S. retail and institutional investors, is contributing to the cryptocurrency’s underwhelming performance.

Despite the anticipation of an executive order expected to boost Bitcoin’s performance, the cryptocurrency’s value has seen a drop of 4.05% recently.

This decline interrupts the 10% surge in Bitcoin’s performance witnessed last week, and seems to be influenced by a high level of trader skepticism currently dominating the market.

Diminishing Influence of Trump on Bitcoin

In the past, President Donald Trump’s actions have positively influenced Bitcoin’s price. However, this effect appears to be waning as investor skepticism increases.

After his 2024 U.S. presidential election victory, Bitcoin surged from $66,780 to $109,350, marking a 63.75% increase. However, since then, Bitcoin has struggled to deliver additional rally opportunities, indicating a shift in market dynamics and sentiment.

Reasons Behind Bitcoin’s Decline

The recent decline in Bitcoin’s value can be traced to skepticism among U.S. retail and institutional investors, who are typically expected to act as major buyers.

This skepticism persists despite the establishment of a strategic Bitcoin reserve tied to their country. The Coinbase Premium Index, which monitors retail investor activity, confirms that retail investors are selling instead of buying.

Institutional investors also appear to be selling in the current market environment. In the last day, the exchange netflow turned negative as institutional holders sold $134 million worth of Bitcoin. This is surprising, as profit-driven investors would typically view Bitcoin’s $88,200 price, at press time,  as a buying opportunity during significant events.

Bulls in the Market, But With Low Momentum

While some market segments remain bullish, the momentum appears weak. In the derivatives market, the Funding Rate indicates a slightly bullish bias, tracking whether longs or shorts pay position premiums. However, enthusiasm seems to be waning.

Crypto investment funds like GBTC are buying, although their pace remains slow. If the derivatives market and crypto investment funds turn bearish, Bitcoin’s price could experience further declines from its current level.