The Bitcoin rally had nothing to do with the Trump Effect

Despite the popular consensus that it was Trump that caused the recent Bitcoin rally, with his claims that the US government will use Bitcoin to wipe out its national debt by establishing a strategic Bitcoin reserve, this was not the reason for Bitcoin’s price action taking it from 54,000$ to 109,000$ from September to December 2024. This article will explore the real reasons for this price action and will conclude by outlining the likely path to be taken by Bitcoin in the next 5 years.

 

To understand why this is happening, it is important to look at Bitcoin’s historic price action and its fundamental design. While many may think that Bitcoin is predominantly a demand driven asset, this is actually not correct, as the intrinsic value of the crypto-currency comes from its supply-reducing design. This happens every 210,000 blocks, or roughly every 4 years, after which the reward for miners halves. After the 2020 halving, the reward dropped from 12.5 BTC to 6.25 BTC, and in 2024 it dropped to 3.25. Historically, the price peaks around a year and a half after the halving has been completed, as it has happened in December 2013, January 2018, and October 2021, with the halvings dating to November 2012, July 2016 and May 2020. This happens due to the tokenomics of Bitcoin – the price must rise for miners to have an incentive to mine, otherwise they would be earning less, and potentially even losing due to increasing costs of the mining operations with each halving, and there would be no point for them to mine at all. Of course, both institutional and retail demand are necessary for Bitcoin's price to rise, but it is Bitcoin’s intrinsic design - particularly its fixed supply and resistance to inflation - that is the primary driver of its long-term value. This design reflects the original purpose of Bitcoin: to serve as a store of value that cannot be eroded by supply inflation.

 

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Source: Verdict.co.uk

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It is for this reason the “Trump effect” had no real effect on Bitcoin, if Trump wasn’t there, the rally would have happened regardless, which is clearly visible through the price action before Trump started making comments about Bitcoin. Some of Trump’s first comments about Bitcoin during his presidential campaign were made around June, however by that point Bitcoin has already returned from its local macro low of 15,705$ and hit 74,000$ in March 2024, breaking the all time high from 2021 which was 68,100$. To add on, Trump’s rhetoric regarding crypto has become more quiet, yet despite that Bitcoin rallied back to 107,000$ at the time of writing on May 21st, and is looking to break the all time high of 109,000$ set 16 days after his inauguration.

 

What Trump is doing may actually hurt the crypto industry, as his unadvised comments create a negative impression of crypto as some get rich quick scheme, especially with his family profiting significantly from their own crypto meme coins within a matter of days from the launch of various tokens like $Trump and $Melania.

 

So what does this mean for the Bitcoin price moving forward? Ultimately, this is an asset driven by fundamentals of its design, and for this reason the price will keep moving upwards throughout 2025 and potentially into early 2026. Our price prediction is that Bitcoin will hit 120,000$-150,000$ range within 6 months of publication of this article. After its peak, it will have a very significant drawback, potentially as low as the previous all time high of 68,000$, before commencing a new pre-halving rally which should take place around 2028, breaking into the 200,000$-250,000$ range in 2029 and 2030.

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Author: Fedor Kutyrkin