Will we get a Bitcoin ‘Sell The News’ crash on Monday or are we headed for a new record?

I have a Bayesian mindset whenever I invest. This means that, just like Peter Brandt, I always think of a possibility that my analysis could be wrong and we are heading in the opposite direction. Spreading my risk is therefore paramount.

So at this point I understand very well why everyone is super positive about Bitcoin as Trump will officially become president from Monday, but on the other hand I can’t stop thinking about last year’s ‘sell the news’ slump that started just as the Bitcoin ETFs finally became a reality. Will we go higher on Monday, are we on our way to a new record or will we go down one more time to flush out weak hands?

Donald Trump

On Monday, Donald Trump will be sworn in for his second term as American president. Normally you would expect crypto investors to be very positive and bullish, but those who already have a little more history with them remember what happened last year. Back then, after several months of waiting, the Bitcoin ETFs were finally approved by the American stock market watchdog SEC. When that happened, the largest digital currency did not go higher, but in fact started heading down. The slump lasted an entire week and dropped Bitcoin by some $10k.

Something like that is called a ‘buy the rumor, sell the news’ move. You buy an investment when a piece of news about it becomes a rumor, and sell when the rumor appears in the newspaper.

The theory goes that Bitcoin’s price growth due to Donald Trump’s victory is already baked into the price and that only a new announcement such as the creation of a strategic Bitcoin reserve or any other major crypto development can create a new record. Hence there is a chance that Whales will want to take profits on Monday.

Lummis

This strategic Bitcoin reserve is explained in the so-called ‘bitcoin act of 2024’, by Republican Senator Cynthia Lummis. If approved, that proposal would require the United States to purchase one million Bitcoins over a period of 5 years.

However, analysts think this would spell bad news for the US dollar and are therefore unsure whether it will pass.

If Trump signs that proposal on day one or talks about it, the price should indeed rise. However, if there is no crypto announcement, the possibility of a ‘sell the news’ slump cannot be ruled out.