Explore our expert analysis here on the SEC’s next move and its implications for XRP’s future.
Bitcoin Dips: Strategic BTC Reserve in Focus
Bitcoin (BTC), meanwhile, extended its losing streak to four sessions on Tuesday, its longest since October, before Trump’s election victory. US President Trump’s recent crypto executive orders (EO) tempered market expectations for an imminent US Strategic Bitcoin Reserve (SBR).
Notably, creating the Presidential Working Group on Digital Asset Markets underscored the complexities of establishing crypto as a bona fide asset class for government holdings. The EO directs the working group to evaluate the potential for a strategic national digital assets stockpile.
The reference to stockpile rather than reserve asset suggested an evaluation of the US government’s existing crypto holdings. The US government has a $20.6 billion crypto stockpile, primarily in BTC ($20.14 billion), with no XRP holdings.
A strategic national digital assets stockpile could make the US government a crypto HODLER, mitigating oversupply risks. However, an SBR could significantly impact the supply-demand balance firmly in BTC’s favor.
The Bitcoin Act’s progress in Congress will be crucial. Senator Cynthia Lummis, Chair of the Senate Banking Subcommittee on Digital Assets, introduced the bill in late 2024. The bill proposes the US government accumulate one million BTC over five years, with a mandatory holding period of 20 years.
Congress, the Federal Reserve, the Treasury Department, and the President must approve a strategic reserve asset.
US BTC-Spot ETF Market: Demand Wanes as Focus Shifts to the Fed
While progress toward a US SBR remains uncertain, the Fed’s rate path is a dominant driver of BTC price trends. US BTC-spot ETF market flow trends suggest investor caution ahead of Wednesday’s interest rate decision and press conference on January 29.
According to Farside Investors, the US BTC-spot ETF market registered $457.6 million in total net outflows on Monday, January 27. On Tuesday, January 28, the BTC-spot ETF issuers (excluding BlackRock’s (BLK) iShares Bitcoin Trust (IBIT)) saw net outflows of $11.7 million.
A hawkish Fed policy stance could raise borrowing costs, impacting demand for riskier assets, including BTC. Conversely, support for multiple rate cuts on a softer inflation outlook could trigger the next crypto breakout. In December, more hawkish-than-expected FOMC economic projections triggered a BTC pullback from its record high of $108,231.
Bitcoin Price Outlook
On Tuesday, January 28, BTC declined by 0.69%, following Monday’s 0.58% loss, closing at $101,363.
BTC’s price trends hinge on the Fed’s policy stance, Trump’s crypto executive orders, SBR developments, and ETF market flows.
- A dovish Fed could boost US BTC-spot ETF inflows, driving BTC beyond its record high of $108,231.
- A hawkish Fed, US BTC-spot ETF outflows, and slow progress toward an SBR could pull BTC toward $95k.
