On January 16, 2025, the cryptocurrency market experienced significant movements as investors shifted their focus toward smaller, high-risk coins in anticipation of President-elect Donald Trump’s inauguration. This surge in interest led to notable gains for several cryptocurrencies, with XRP and Litecoin rising by 11% and 20%, respectively, according to data from Coin Metrics. The broader CoinDesk 20 index, which tracks a wide range of cryptocurrencies, posted an increase of 4%.
Bitcoin, while showing a modest increase of less than 1%, reached a price of $100,000 after a two-day rally that saw it gain about 7% earlier in the week. In contrast, Ethereum experienced a decline, falling by 3% on the same day.
Investor Optimism Amid Political Change
Alexander Blume, CEO of the advisory firm Two Prime Digital Assets, noted that retail investors are actively seeking opportunities as a pro-cryptocurrency administration prepares to take office. “The Trump administration is a rising tide that will lift all boats in crypto, and altcoins are seeing some early gains from this,” he stated.
Trump’s inauguration is set for Monday, and many in the crypto community are keenly watching how his presidency might impact the market. Trading platforms like Coinbase and Robinhood also saw slight increases, with Coinbase rising by 2% and Robinhood gaining over 1%. Additionally, MicroStrategy, known for its significant Bitcoin holdings, also saw an uptick of more than 1%.
Market Expectations and Speculation
Gracy Chen, CEO of crypto exchange Bitget, emphasized the importance of the first 50 days of Trump’s presidency, predicting they will significantly influence Bitcoin’s trajectory for the year. “The crypto market’s expectations for his inauguration and initial actions as president are extremely high,” she remarked, highlighting how sensitive crypto prices have been to Trump’s statements and appointments in the latter part of 2024.
During his campaign, Trump made several promises that could affect the cryptocurrency landscape, including the establishment of a crypto advisory council within his first 100 days and a commitment to replace Gary Gensler, the current chair of the Securities and Exchange Commission, who has been seen as an adversary to the industry. Following the November election, the CoinDesk 20 index surged by 98%, while Bitcoin saw a robust 46% gain during the same timeframe.
Small-Cap Cryptocurrencies and Speculative Trends
The recent fervor surrounding smaller-cap cryptocurrencies can also be attributed to speculation regarding the government’s possible inclusion of these coins in a strategic reserve, which could involve “American” cryptocurrencies like XRP and Solana. Blume commented, “While this is unlikely, it has surprised many and is motivating speculators to purchase these coins. However, the best long-term value is still expected to be in Bitcoin.”
Trump’s proposed regulations aim to foster a favorable environment for domestic Bitcoin mining and the establishment of a national Bitcoin stockpile. As investors navigate the landscape, they are bracing for potential volatility this year, caught between concerns over rising inflation under Trump’s administration and optimism stemming from his pro-cryptocurrency stance.
