Contrary to most expectations, US President Donald Trump's second term had a positive impact on Bitcoin prices. Although the flagship cryptocurrency has hit its highest since President Trump took office in January, the market remains largely bearish, with the market mostly in corrections and range-bound situations. Cryptocurrency analysis page XWIN Research Japan recently provided a comparative analysis to the post-election euphoria seen in 2016 to explain why there is no enthusiasm for price trends beyond 2024.
Analyst explains why Bitcoin structure is so different from 2016
In a Quicktake post on CryptoQuant, the research and education organization makes an important comparison between the 2016 and 2024 post-election periods. Immediately after President Trump's victory in 2016, the cryptocurrency market was operating in an environment of low inflation and low interest rates, an ideal environment for a market with increasing liquidity. Additionally, the relatively small size of the cryptocurrency market has allowed speculative liquidity to accumulate quickly. Therefore, the market was able to get enough money to serve as fuel for a strong long-term uptrend.
However, early 2025 saw a different market environment and dynamics. This year began with a period of high interest rates, and the financial situation became increasingly catastrophic. Additionally, the larger market size and increased multi-investor participation (compared to the 2016 post-election market) have structurally reduced the sole importance of political events in price movements. Simply put, policy implementation alone can do little to move the price of Bitcoin, especially when liquidity constraints are large.
LTH-SOPR ratio further reflects caution
XWIN Research Japan also references data obtained from the Bitcoin SOPR ratio (LTH-SOPR/STH-SOPR), which confirms the cautious attitude of investors following Trump's second presidential inauguration. The Bitcoin SOPR ratio deciphers market sentiment by comparing whether long-term holders are realizing profits more aggressively than short-term holders, and serves as a key indicator of whether a price trend is due to belief by institutional investors or speculative trading.
According to the research team, long-term Bitcoin holders (LTH) are finding that their returns are limited. Meanwhile, short-term holders are trading within the red region. Historically, this condition is usually seen when a market is about to embark on a long supply and demand adjustment journey.
Based on historical data, it is clear that Bitcoin is currently in a fundamentally bearish structure. XWIN Research explains that “downside may be supported as long as long-term holders maintain their relative advantage and short-term holders' selling is absorbed,” with the caveat that upside leadership is also likely to remain limited.
The analysis group further speculates that a steady increase in Bitcoin ETF inflows and an apparent decline in LTH distributions will be crucial in saving BTC from a downward spiral. Until these things happen together, Bitcoin may remain in its current state of inertia or, in the worst case scenario, sink further south. At the time of writing, Bitcoin is valued at approximately $87,623, marking a slight decline of 0.5% from last week and a rise of 0.6% from the past 24 hours, according to data from CoinMarketCap.
Featured images from Pexels, charts from Tradingview
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