Today (November 8, Singapore time), the Federal Reserve cut rates by 25 basis points as expected, and Trump, a pro-crypto candidate, announced that the election has brought significant benefits to the cryptocurrency market. BTC faces the triple benefits of the halving cycle in November, election incentives, and rate cuts, ushering in a bull market!
Trump's Election: New Hope for the Cryptocurrency Market
In economic policy, Trump advocates for economic freedom and reduced government intervention, showing a positive attitude towards cryptocurrency and attempting to establish the U.S. as a global cryptocurrency center. His stance has attracted a segment of voters who are positively inclined towards cryptocurrencies. He is even referred to as the first 'crypto president.'
He plans to incorporate Bitcoin into the United States' strategic reserve assets and promote more open cryptocurrency market policies. In addition, Trump verbally promised to fire SEC Chairman Gary Gensler, a move that would further relax regulations on Bitcoin and other cryptocurrencies.
After Trump's election, BTC indeed rose to $76,000, peaking at $76,900, setting a historical high. The increase exceeded 10% within two days, currently valued at $75,778. For detailed analysis, you can download the AICoin app at https://www.aicoin.com/download
Image source: AICoin
J.P. Morgan also stated in its latest report that the largest digital currency by market capitalization, BTC, will continue to benefit from the Republican victory in the U.S. presidential election, stating, 'We continue to see Trump's trades producing a response similar to that of 2016 over the next eight weeks.'
Federal Reserve cuts rates by 25 basis points
The Federal Reserve's rate-cutting policy stimulates the economy by lowering borrowing costs and increasing market liquidity, which is typically favorable for risk assets, including Bitcoin. With the implementation of rate cuts, the market expects cryptocurrency investments to increase, as investors often seek higher-yield investment opportunities in low-interest-rate environments.
Rate cuts lead to the depreciation of the dollar, which usually drives investors towards alternative assets like Bitcoin, as they are seen as tools to hedge against inflation.
The federal funds rate target range was lowered by 25 basis points to between 4.5% and 4.75%. This is a response to the slowing economic growth and aims to stimulate economic activity by reducing borrowing costs. A rate cut typically increases market liquidity and lowers the cost of capital, which is favorable for risk asset markets.
BTC Halving Cycle: Scarcity and Price Potential
Bitcoin halving refers to the event where the block reward is reduced by 50% after mining 210,000 blocks (approximately every four years). Bitcoin's halving event reduces the supply of new Bitcoin, thereby increasing its scarcity and price potential. The halving cycle is generally seen as a key bullish factor for the Bitcoin market because it typically triggers a price increase afterward.
According to historical data, the first halving occurred on November 28, 2012, when the block reward dropped from 50 BTC to 25 BTC. A year after the halving, Bitcoin's price reached an all-time high, increasing by nearly ninety times; the second halving was on July 9, 2016, when the block reward fell from 25 BTC to 12.5 BTC, and a year later, the price again reached an all-time high, increasing by over twenty times; the third halving was on May 11, 2020, when the block reward dropped from 12.5 BTC to 6.25 BTC. Each time a halving occurs, Bitcoin's price rapidly rises within 6 to 12 months and reaches a historical high.
The latest historical halving event occurred on April 19 this year, where the block reward dropped from 6.25 BTC to 3.125 BTC. Historically, the recent months have been the bull market cycle for BTC during halving events.
Image source: AICoin
Summary
Amid increasing global economic uncertainty, investors are more optimistic about Bitcoin's potential as a safe-haven asset. The market generally believes that three favorable factors will jointly drive Bitcoin into a new bull market. These three favorable factors not only bring new opportunities to the Bitcoin market but also provide investors with a chance to reassess the value of cryptocurrencies.
As the global economic environment changes, Bitcoin's market performance will continue to attract the world's attention. While the future remains full of uncertainties, it is certain that Bitcoin is on the eve of a transformation.
