Bitcoin (BTCUSD) Forecast: How Could President Trump's Relationship With Cryptocurrencies Stimulate The Markets?

(MENAFN- Investor Ideas) Investorideas, a go-to platform for big investing ideas releases market commentary from Rania Gule, Senior Market Analyst at XS - MENA

Bitcoin (BTC) experienced a significant decline below the $100,000 level before rising back to $103,300 on Tuesday, within a medium-term descending channel. This pullback was partly linked to the rapid rise of DeepSeek, a Chinese AI startup. Launched in January 2025, this new AI model attracted attention due to its high efficiency compared to OpenAI's ChatGPT, putting pressure on both the stock and cryptocurrency markets. The lower cost of developing DeepSeek, at just $1 million compared to OpenAI's $17.9 billion, raised concerns about China's dominance in the chip market, leading to market turbulence and a drop in Bitcoin prices to levels not seen in a while.

In my view, given the increasing correlation between the stock and cryptocurrency markets, Bitcoin's price could face further pressure if the U.S. stock markets continue to decline, especially with the growing concerns over AI development costs in China. If these market downturns persist in traditional markets, Bitcoin may remain within a narrow range or experience further declines. On the other hand, if DeepSeek demonstrates an increased use of AI chips with higher efficiency than advertised, a noticeable improvement in both financial markets and cryptocurrencies could occur in the coming months.

Bitcoin (BTC) saw a notable correction as it briefly dropped below $98,000 yesterday for the first time since President Donald Trump's inauguration. Despite this 7.13% drop, I believe the cryptocurrency's fundamentals remain strong, with a notable increase in institutional adoption across multiple fronts. These trends indicate that Bitcoin remains an attractive option for long-term investors. As attention turns to President Trump's policies on cryptocurrencies, a new landscape emerges that could reshape the future of this global industry. When Trump pledged to make the U.S. the "cryptocurrency capital of the world," reactions from supporters and sceptics varied. While Trump is pushing policies to reduce government oversight in this sector, some are highlighting potential risks threatening the global financial system and individual investors.

I view Trump's stance on cryptocurrencies as a strategic step toward positioning America as a leader in this growing industry. By strengthening ties with industry leaders and appointing individuals close to these sectors to key positions, such as selecting Paul Atkins to head the SEC, Trump has begun laying the foundation for the development of the cryptocurrency market in the U.S. Undoubtedly, this policy will drive rapid growth in these assets, which continue to stir debate due to their high volatility and associated risks.

However, this momentum also brings concerns that such a shift could lead to a more chaotic and less regulated market, increasing risks for investors. The global financial markets have witnessed numerous scandals related to cryptocurrencies in recent years, with the collapse of FTX and the involvement of its founder in massive fraud being the most prominent example. This raises concerns about the need for stricter regulation and government guidance to protect investors from abuses. Without strict government regulation, cryptocurrencies may become a breeding ground for financial crimes like money laundering and cyber fraud, which has experts and observers worried.

On the other hand, I noticed a contradiction between Trump's pro-cryptocurrency rhetoric and his actions. Despite previously describing Bitcoin as a "fraud," he later launched his cryptocurrency, $Trump. This move was not just the release of a digital token but a clear attempt to capitalize on the growing cryptocurrency market, complicating Trump's image in this field. This represents a stark conflict between public interests and private policies, reinforcing concerns that Trump's actions may be driven more by personal interests than the broader economic benefit of the United States.

Additionally, I find the idea of creating a Bitcoin reserve under U.S. government oversight concerning. This initiative may prove to be a miscalculation in the long run, as Bitcoin's price volatility could result in substantial financial losses for the U.S. government. This approach could lend Bitcoin official legitimacy while exposing U.S. taxpayers to significant risks due to unpredictable fluctuations in cryptocurrency prices. Even if this project aims to enhance the U.S.'s position in the cryptocurrency market, it may open the door to speculative activities that could have adverse long-term effects.

In my opinion, the future of cryptocurrencies remains uncertain in light of Trump's policies. Will these assets experience more growth in the U.S., or will the risks tied to weak regulation lead to their collapse? It is clear to me that the future paths will remain complex, requiring a balanced approach to ensure sustainable growth while maintaining adequate oversight to ensure market stability and protect investors.

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