Crypto insanity is heating up this week as Bitcoin and a couple of fresh Trump tokens enjoy an Inauguration Day head start over the sleepy stock market.
While stocks enjoyed a three-day weekend, a fresh Donald Trump-produced meme coin (TRUMP) exploded to a $10 billion market value. Shortly after TRUMP began to run out of steam, Melania Trump launched her own coin (MELANIA), which briefly reached a $1 billion market value on Sunday before tumbling back to reality.
"The boom in Trump-related crypto ventures comes as he promises to usher in a new 'golden age' for cryptocurrencies, in stark contrast to the regulatory scrutiny of the industry the Biden administration enforced," Reuters reports.
I'm not so sure Trump coin pump-and-dumps qualify as a crypto golden age. But Bitcoin continues to defy a choppy equities market. In fact, Bitcoin briefly shot to fresh all-time highs above $109K in the wee hours Monday morning.
Some speculators believe the inauguration hype inspired this latest Bitcoin spike. That might be true. But you should also know Bitcoin has been firming up for more than a week. Now, the table is set for the next leg higher.
Last week, I was tracking some short-term price targets as Bitcoin caught a bid and started to creep higher. Following a strong finish to the week and the brief leap to new highs yesterday, it's time to take a closer look at what to expect from an extension of the crypto bull.
And, yes - Bitcoin can continue to march to new highs despite the sluggish stock market action we've experienced over the past six weeks.
Of course, everyone's probably getting way too bearish right now. Santa failed to show, January is off to a back-and-forth start, and sellers have knocked a lot of air out of the frothiest stocks that were screaming higher during the fourth quarter.
As stocks began to recover following favorable inflation data earlier this week, I'm sure there's one question on your mind: What should I look to buy in this choppy market?
Many of the popular stocks that folks were trading back in November might need more time to set up for fresh trades.
But Bitcoin is ripe for another strong rally...
Here are three reasons why Bitcoin is set to extend above $120,000 in the weeks ahead:
While Bitcoin is still flirting with $100K, we're seeing some of the beaten-down crypto miners stretch their legs.
Hut 8 (HUT) logged double-digit gains on Wednesday as Bitcoin extended higher. Meanwhile, Riot Platforms (RIOT)jumped nearly 10% to post fresh January highs. CleanSpark (CLSK) also gained more than 8% to post its fourth straight day of gains.
Granted, these Bitcoin miner charts are far from perfect (I'd say HUT is my favorite one at the moment). But we can't discount the fact that these stocks are already posting big moves as if they're anticipating an impending Bitcoin breakout following nearly two months of sideways action.
Aside from the miners, we're also seeing strong moves from other crypto-adjacent stocks. Trading app Robinhood Markets (HOOD) is even breaking out to fresh all-time highs this week as it enjoys the one-two punch of positive analyst comments and a finalized SEC settlement.
If speculators are going after the crypto plays in the stock market, it's only a matter of time before Bitcoin falls in line and continues its march higher.
Bitcoin enjoyed a huge rally during the pandemic trading boom in Q4 2020. Crypto continued its hot streak into January 2021, just as huge squeezes in Tesla (TSLA) and meme stocks like GameStop (GME) dazzled traders.
January 2025 hasn't been as kind to speculative stocks thus far. But remember, Bitcoin didn't need any extra juice from the stock market to continue its romp in 2021. While most of the frothy names ran out of steam by early February, Bitcoin continued to push higher into mid-April.
But that wasn't the top. Bitcoin traded within a $30K range for the remainder of the year, while speculative growth areas of the market such as the ARK Innovation ETF (ARKK) were cut in half.
Will we see the 2021 scenario unfold again?
I don't have a crystal ball, so I can't say for certain. But I wouldn’t be surprised if the next few months rhyme.
Bitcoin has essentially traded in a sideways range since late November as it marched to its first breakout above $100K.
Now that it's beginning to turn higher again, we can begin plotting price targets in anticipation of an upside breakout.
Here's how I see it playing out...
If Bitcoin can get back above $105K and start to run, it will likely escape this sideways chop and produce a rally similar in magnitude to what we saw in early November when it jumped from the low $70K range to the mid $90Ks.
That gives us approximately $20K of upside from the breakout zone.
I think that makes $120K a reasonable target looking ahead to the late first quarter maybe even sooner if Bitcoin runs like it did back in Q4.
Whether Trump's new administration is the next major catalyst for Bitcoin or not, it's looking like the path of least resistance is higher in the short-term.
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