Will Bitcoin’s Rally Stall After Trump’s 2025 Inauguration?

The cryptocurrency market has been on a tear, riding the bullish wave post-election. But history suggests that this momentum may slow once President-elect Donald Trump officially takes office on January 20, 2025. Could we see a post-inauguration dip, or will the bull run defy expectations? Let’s break it down.

Election Cycles and Market Trends

Historically, U.S. financial markets tend to rally in the weeks following a presidential election, only to cool down once the newly elected leader steps into the Oval Office. This trend applies not only to stocks but also to cryptocurrencies like Bitcoin (BTC).

According to Bloomberg and Macrobond Financial, markets often experience optimism after an election, particularly when a Republican wins. The GOP is typically seen as business-friendly, encouraging investor confidence. Research from TS Lombard shows that this positive sentiment can drive markets higher—until inauguration day, when enthusiasm sometimes wanes into a short-term correction.

What Experts Are Saying

Scott Chronert, a U.S. equity strategist at Citi, suggests investors should be cautious if the S&P 500 surpasses its bullish year-end target of 6,100 points. “Investors should tactically fade a post-election rally,” he warned in a recent research note.

Looking back at similar moments in history, market data suggests that pullbacks after inauguration are common. However, the data also indicates that markets tend to recover following the initial slump.

Market Performance
Source: Eric Soda

A Post-Election Crypto Boom

As of early December, the S&P 500 has jumped nearly 4.5% since the election, and cryptocurrencies haven’t missed out on the action.

Bitcoin, in particular, has seen a staggering 30% post-election gain, mirroring a broader wave of enthusiasm throughout the industry. Solana (SOL) has also surged significantly.

Many traders see Trump’s election victory as a net positive for crypto, given his previous statements on deregulation and business growth. According to Cointelegraph Research, expectations for a friendlier regulatory environment are fueling optimism.

Will Bitcoin Correct Before Moving Higher?

Not everyone believes that Bitcoin’s rally will be uninterrupted. Ryan Lee, chief analyst at Bitget Research, warns that Bitcoin could see a correction of up to 30% before resuming its uptrend.

“Historical data trends show that Bitcoin may still correct as much as 30% before it reaches its cyclical top,” he noted in an interview with Cointelegraph.

A move like this would theoretically bring BTC down to around $70,000, a level that bulls would have to defend before the next leg up. Despite potential short-term volatility, investment firms like MV Global expect the crypto rally to persist well into 2025, peaking in the second half of the year.

Stock Movements
Source: TS Lombard

Is Bitcoin Still Correlated with Stocks?

A long-running narrative in crypto has been Bitcoin’s correlation to traditional markets—especially tech stocks. But recent data suggests that relationship may be weakening.

According to Binance Research, Bitcoin’s 30-day rolling correlation with the Nasdaq dropped to 0.46 in early 2024—one of the lowest levels in five years. While this signals greater independence for BTC, it still retains some exposure to overall market sentiment.

What About Ethereum?

Ethereum (ETH), on the other hand, remains more tightly linked to traditional markets. Data from MacroAxis shows ETH’s correlation with the Nasdaq sits higher at around 0.66, suggesting it may still be influenced by macroeconomic trends and stock market movements.

What’s Next for Crypto Investors?

If history is any indication, Bitcoin and the broader crypto market could experience post-inauguration turbulence before continuing their upward march. While past trends suggest a possible correction, long-term sentiment remains bullish, with many analysts forecasting a peak later in 2025.

As the market digests new political shifts and potential regulatory changes, savvy investors will be watching for both short-term dips and long-term opportunities. Whether Bitcoin truly becomes independent of traditional markets, or if Trump’s presidency ushers in a new era of crypto-friendly policies, remains to be seen.

Either way, 2025 is shaping up to be a defining year for cryptocurrency. Buckle up! 🚀

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