• Bitcoin keeps rallying on Trump’s return to the Oval Office
• But a correction seems likely before the next leg north
• ETF inflows have slowed, supporting the correction scenario

Bitcoin hits new record high on ‘Trump trade’

With Republicans looking increasingly likely to lock a majority in the House of Representatives, the so-called ‘Trump trades’ are not showing signs of cooling as a Republican-controlled Congress will make it very easy for Trump to turn his promises into legislation.

One of the biggest beneficiaries of the ‘Trump trade’ seems to be Bitcoin, surging more than 25% since the election day and hitting a new record high of around $90,000 on Tuesday. Perhaps crypto enthusiasts continued to celebrate the prospect of the new administration being crypto friendly.

Trump embraced crypto assets during his election campaign, saying that he wants to make the US the “crypto capital of the planet”, with his pledges including a plan for a state bitcoin reserve, as well as softer regulation towards the industry.

Therefore, with that in mind, and also taking into account that bitcoin has no intrinsic value and can be considered overvalued by some market participants, the sky seems to be the limit when there is euphoria around it.

Stretched rally and slowing ETF inflows suggest a correction

Having said all that, though, a corrective pullback before the next leg north may not be an unrealistic case, as many traders may decide to realize some of their profits and ride the bullish trend again at a more attractive entry point.

The likelihood of a corrective setback soon is rising as data from Coinglass currently reveals that, although Bitcoin ETF inflows remain elevated, they have slowed notably since the elections.

But the broader outlook remains overly bullish

From a technical standpoint, bitcoin took a breather after skyrocketing and hitting a new record high of around $90,000 on Monday. Overall, the crypto king is trading well above the short-term uptrend line drawn from the low of September 7 and well above the 100- and 200-day exponential moving averages (EMAs).

This paints an overly bullish picture, but it also implies an elevated likelihood for a bearish correction closer to the aforementioned uptrend line. If the bulls decide to take a break and allow the price to pull back, they may decide to re-enter the game near the $73,800 zone, which offered resistance back in March and more recently, on October 28. If so, traders may be tempted to challenge the $90,000 area once again and see whether they can manage to easily enter uncharted territory.

For the Bitcoin outlook to darken and turn bearish, the price may tumble all the way towards and below the key pivot zone of $65,800. This will not only signal a break below the latest uptrend line, but also crypto’s return within the prior broadening consolidation pattern. The bears may then dive towards the $61,600 zone or the $56,200 area.