Contrary to widespread expectations, US President Donald Trump’s second term has had a positive impact on the price of Bitcoin. While the flagship cryptocurrency has hit record highs since Trump’s inauguration in January, the market has mostly been in a consolidation and range-limiting phase and the broader picture remains bearish. Crypto analysis page XWIN Research Japan recently provided a comparative analysis with the 2016 post-election euphoria, explaining why there is no enthusiasm for price action beyond 2024.
Analyst explains why Bitcoin’s structure is significantly different from 2016
In a Quicktake post on CryptoQuant, the research and academic organization critically compares the 2016 and 2024 post-election periods. Immediately following Trump’s victory in 2016, cryptocurrency markets operated in an environment of low inflation and low interest rates, which is ideal for markets with increasing liquidity. Additionally, the relatively small size of the cryptocurrency market has allowed speculative liquidity to accumulate quickly. Thus, the market was able to secure sufficient capital to fuel a strong upward trend over the long term.
However, by early 2025, the market environment and dynamics have changed. The year began and extended with a period of high interest rates that made financial conditions increasingly worse. Additionally, the larger market size (compared to the post-2016 election market), coupled with the increased participation of multiple investors, has structurally reduced the stand-alone importance of political events on price movements. Simply put, policy implementation alone can do little to move the Bitcoin price, especially if it is hampered by more liquidity constraints.
The LTH-SOPR ratio further reflects caution.
XWIN Research Japan also references data obtained from the Bitcoin SOPR ratio (LTH-SOPR/STH-SOPR), which reinforces the cautious stance among investors following Trump’s second inauguration. The Bitcoin SOPR ratio deciphers market sentiment by comparing whether long-term holders are taking profits more aggressively than short-term holders, and serves as an important indicator of whether price trends are driven by institutional beliefs or speculative trading.
According to the research team, long-term Bitcoin holders (LTH) are realizing limited profits. Short-term holders, on the other hand, are trading within the red zone. Historically, these conditions are typically found when the market is about to embark on a long-term supply and demand adjustment journey.
Based on historical data, it is clear that Bitcoin is currently in a fundamentally bearish structure. “The downside could be supported as long as long-term holders maintain relative dominance and selling by short-term holders is absorbed,” XWIN Research said, but it came with the caveat that upside leadership is also likely to remain limited.
The analyst group speculates that steady growth in Bitcoin ETF inflows coupled with a clear decline in the value of the LTH distribution will play a pivotal role in rescuing BTC from its downturn. Until these things happen simultaneously, Bitcoin may remain in its current state of inertia or, in the worst case scenario, fall further south. At press time, Bitcoin was worth about $87,623, down a slight 0.5% since last week and up 0.6% since the last 24 hours, according to CoinMarketCap data.
Featured image from Pexels, chart from Tradingview
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