After taking a breather on Tuesday, Bitcoin was back in rally mode on Wednesday, defying expectations of a correction or an extended consolidation. Not long after North American trading opened, the flagship crypto currency cracked the $93k mark for the first time ever before falling back. According to Coinglass, $711,340,000 worth of positions were liquidated over the past 24 hours, with BTC shorts accounting for the largest losses. Binance saw the most liquidations, followed by OKX and Bybit. Wednesday’s session was a roller coaster ride, with many observers even expecting BTC to smash $100k by the close if the $95k resistance line could be taken out. The rally, however, ran out of steam shortly after it blew past the $93k mark. We note that there was a “clear sky” between $95k and $99k, with virtually no short positions to be seen, but in the end the bulls buckled under bearish pressure, the price action fizzled and retreated back below the $90k level to close at $88,637.42. Ethereum (ETH) traded up 1.05% on the day, closing at $3,192.
Admittedly, many traders, market participants and analysts (including yours truly) were caught off guard, since it now looks like the Trump trade could be gaining momentum instead of fading. The latest catalyst behind yesterday’s bull run was news that Elon Musk was named to join Trump’s Cabinet, heading up the so-called Department of Government Efficiency, which Musk has affectionately nicknamed DOGE – an unveiled reference to his beloved Shina Inu meme coin. This agency is expected to partner with the Office of Management and Budget to “drive large-scale structural reform, and create an entrepreneurial approach to Government never seen before.”
To remind, back in October 2022, Musk took over Twitter and renamed it as X, slashing over 80% of the workforce (preventing a $3 bln shortfall), with just 1,500 employees left to run the platform. Although heavily criticized at the time for the mass layoffs, Musk managed to restore free speech, purge the woke bureaucracy and place the platform back on a more conservative footing. By applying a similar strategy to US federal government reforms, an even greater purge could be in the cards, with a massive reduction of bloated departments, while rotating trusted corporate allies such as Steve Davis, Omead Afshar, and Jared Birchall into the reform process. Trump expects Musk to cut at least $2 trln from government spending by eradicating “waste”. In the last fiscal year, ended September 2024) the US government spent a whopping $6.76 trln, so Musk’s proposed cuts would represent about 30% of total federal spending. Vivek Ramaswamy, who has been tasked to assist Musk in “dismantling government bureaucracy,” has set an even more ambitious target, proposing to cut the federal workforce by up to 75%.
While the scope, breadth and success of this plan could take months or years to materialize, the DOGE meme coin has been “hot to trot” ever since Trump tapped Musk to head up the Department of Government Efficiency. DOGE is up 153% since Election Day, far outperforming Bitcoin’s 30% rally since November 6. Earlier this week, Dogecoin overtook XRP to become the sixth-largest cryptocurrency by market cap. DOGE currently has a market cap of $58.91 bln and was hovering near $0.40 by the time of writing. Before the election, the coin was trading at less than half its current value. We predict that it could pump as high as $1.00 by year-end 2024.
Technical analysis
On the short-term TF, BTC has held above the bullish flag that formed near $90k, which appears to be turning into a support level. If the bulls can hold this level until the North American opening, we could see the 1.618 Fib extension rise to $101k by the end of today’s session. The next resistance lies at $92,629, and if a breakout at this mark occurs, we could see another push for the $100k later this afternoon stateside. That said, BTC has rallied massively from $68-93k in the span of seven days, so FOMO could still be overshadowed by greed, with profit-taking potentially breaking out at or above the six-digit mark.