1. Introduction
Recently, the Bitcoin and cryptocurrency market has experienced a new round of explosion, one of the important driving factors being the so-called 'Trump trade' effect. Bitcoin has broken through key historical resistance levels in a short time, not only indicating a strong rebound in the crypto market but also demonstrating the sustained preference of global investors for digital assets amid an uncertain macro environment. This report will deeply analyze the direct and indirect effects of the 'Trump trade' on the cryptocurrency market, exploring the market sentiment changes, price fluctuations, and potential future trends it may bring. We will comprehensively assess the future trends of Bitcoin and other crypto assets and the potential risks in the market by integrating macroeconomic data, policy backgrounds, and market sentiment.
2. Macroeconomic Background Analysis: Multiple Driving Forces of the Crypto Bull Market
2.1 Global Economic Slowdown and the Hedging Attributes of Crypto Assets
Global economic growth has continued to slow since 2023, particularly after the Federal Reserve's series of interest rate hikes, which have restricted dollar liquidity and reduced overall capital market liquidity. In the context of slowing economic growth, global investors are more inclined to allocate risk-resistant assets, and Bitcoin, due to its decentralized and anti-inflation characteristics, is increasingly regarded as 'digital gold.' In 2024, the crypto market is entering a new bull market cycle, closely related to the increasing demand for global safe-haven assets.
The hedging attribute of cryptocurrencies stems from their low correlation with traditional markets. Especially after Trump re-engaged in the political arena, his public support for cryptocurrencies has instilled confidence in the market, prompting investors to include Bitcoin as a 'safe-haven asset' in their portfolios amid an uncertain economic environment, thereby driving up Bitcoin prices.
2.2 Changes in Federal Reserve Policy and Currency Depreciation
The Federal Reserve's interest rate policy has a profound impact on the crypto market. Post-pandemic, the Federal Reserve has raised interest rates multiple times to control inflation; however, in 2024, as the pace of rate hikes slows, market expectations for rate cuts have increased. The volatility of the dollar index and the trend of dollar depreciation have led investors to turn to cryptocurrencies to avoid long-term depreciation risks of the dollar.
In this case, Bitcoin's scarcity and borderless characteristics attract capital inflows from around the world. Particularly under Trump's influence, the demand for Bitcoin in the U.S. market has seen a new round of growth. The linkage between the U.S. economy and dollar depreciation encourages investors from other countries to flock to the Bitcoin market to avoid the risk of their local currencies depreciating. Furthermore, the potential for the Federal Reserve to continue easing monetary policies in the future will further benefit the crypto market.
2.3 The Long-Term Threat of Inflation and the Anti-Inflation Properties of Cryptocurrencies
With the global economic recovery, inflation continues to rise. The fixed supply, scarcity, and decentralized nature of cryptocurrencies make them increasingly attractive for investment amid rising inflation. Particularly for Bitcoin, its constant total supply serves as 'insurance' against inflation, offering a unique value retention function compared to traditional assets.
Trump's public support has further strengthened this attribute. As uncertainty in U.S. politics increases and inflation pressures remain high, Bitcoin's anti-inflation characteristics have led more institutions and individual investors to view it as a long-term investment option. With the global demand for anti-inflation assets increasing, Bitcoin is expected to become an important hedge tool in the new bull market cycle.
3. Trump's Trade's Direct Impact on the Crypto Market
3.1 Interpretation and Origin of the 'Trump Trade' Concept
The term 'Trump trade' first emerged during Trump's presidency, when his policies and remarks frequently triggered fluctuations in the capital market, causing rapid changes in financial market sentiment. Trump's economic policies, attitudes towards the Federal Reserve, and public stance on digital assets all influence investors' risk appetite. Currently, Trump's remarks in support of cryptocurrencies have reactivated this effect, with investors generally believing that his words and actions play a crucial role in boosting Bitcoin's price.
In the new round of market fluctuations, the 'Trump trade' effect is highlighted, and Bitcoin's volatility increases. Trump's supportive stance on crypto assets has not only attracted significant market attention but has also led more traditional and new investors to enter the market. Under Trump's influence, the price fluctuations in the crypto market have become more frequent, bringing greater investment opportunities.
3.2 Changes in Market Sentiment: From Wait-and-See to Buying the Dip
The change in market sentiment brought about by Trump's remarks is particularly evident. From his first statement, Bitcoin's price quickly broke through important resistance levels in the short term, prompting many investors who were waiting on the sidelines to accelerate their entry into the market. Market sentiment shifted from wait-and-see to buying the dip, with FOMO (fear of missing out) sentiment driving up Bitcoin's price.
Meanwhile, the sentiment index of the cryptocurrency market shows that with the increase in Trump's related remarks, market optimism has risen to an annual high. Investors not only view Bitcoin as a short-term profit tool but also see it as a long-term means to hedge against future policy uncertainties and protect personal assets. This change in sentiment has triggered capital flows, further driving up Bitcoin's price.
3.3 Profound Impact on the Crypto Ecosystem
Trump's supportive attitude towards cryptocurrencies has not only affected Bitcoin's price but has also driven the development of the entire crypto ecosystem. Particularly in emerging fields like NFTs, DeFi, and Web3.0, Trump's remarks have injected new momentum into investor confidence. These innovative areas, due to their decentralized and risk-resistant properties, have attracted significant attention from funds and developers, boosting overall market activity. Especially in the NFT sector, the introduction of cryptocurrency-based projects by the Trump family has significantly increased NFT trading volume. The expansion of the NFT market benefits mainstream crypto assets like Bitcoin and Ethereum while enhancing liquidity in the entire crypto ecosystem, supporting the long-term development of the market.
4. Analysis of Different Stages of the New Bull Market Cycle
4.1 Early Stage of the Bull Market: Institutional Entry and Price Drives
In the early stage of a bull market, the influx of institutional investors is the main driving force behind the market's rise. Stimulated by Trump's related remarks, many institutional investors have increased their Bitcoin holdings, significantly enhancing market liquidity. Statistical data shows that the proportion of funds from institutional investors has risen sharply, indicating that Bitcoin is gradually entering the investment portfolios of traditional investors. Compared to previous bull markets, institutional holdings in this round are more stable, especially with the entry of large investment funds, hedge funds, and pension funds, leading to more stable Bitcoin price fluctuations. The entry of institutions not only increases market depth but also reduces Bitcoin's volatility, enhancing market maturity.
4.2 Mid-Term of the Bull Market: FOMO Effect and Retail Entry
The mid-term of a bull market is usually accompanied by an amplification of the FOMO effect. Driven by institutional investors, the attention of retail investors sharply rises. Especially against the backdrop of frequent media headlines featuring Trump's remarks, many retail investors quickly enter the market to share in the bull market's dividends. The changes in the market sentiment index clearly reflect this phenomenon. Market activity significantly increases, with trading volumes reaching historic highs. Discussions about cryptocurrencies on various social media continue to climb, particularly after Bitcoin breaks through psychological resistance levels, with FOMO sentiment driving retail entry. In the context of heightened market sentiment, prices surge rapidly.
4.3 Later Stage of the Bull Market: Risk Control and Rational Investment
In the later stages of a bull market, market volatility may increase, and risk appetite may decrease. At this time, some investors who entered at high prices may gradually reduce their holdings, leading to fluctuations in market sentiment. Additionally, government regulatory policies and market adjustment pressures may also affect prices. Despite Trump's support for cryptocurrencies, investors need to remain cautious to avoid high-position risks.
During this stage, the market often experiences fluctuations, and investors should strengthen risk control. The reduction of holdings by institutional investors in the later stages of a bull market can also trigger price fluctuations. In the process of market transition, investors should adopt prudent strategies to mitigate risks.
5. In-Depth Analysis of Policy Risks
Trump's supportive attitude towards cryptocurrencies brings positive signals to the market, but the legal status and compliance of cryptocurrencies still face risks.
5.1 Regulatory Dynamics in the United States
Although Trump supports cryptocurrencies, regulatory agencies such as the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) remain cautious about crypto assets. The regulatory measures of these agencies have far-reaching impacts on price fluctuations in the crypto market. In particular, the SEC's stance on the approval of Bitcoin spot ETFs will directly affect market liquidity and prices. If the attitude of regulatory agencies toward crypto assets changes, it could impact market sentiment and lead to price adjustments.
5.2 Global Policy Risks
Besides the United States, regulatory policies in other countries also significantly impact the market. For example, China and the European Union have relatively strict attitudes toward cryptocurrencies. Changes in policies across countries may lead to capital flows, increasing market volatility. Under Trump's influence, the U.S. may relax its policies, but the positions of other countries also need to be closely monitored.
6. Conclusion: The Prospects of the New Bull Market and the Strategies for Investors
In 2024, against the backdrop of increasing uncertainty in the global economy and a reshuffled political landscape in the United States, the 'Trump trade' effect injects new momentum into the Bitcoin market. The breakout of Bitcoin's price and the beginning of the bull market cycle bring abundant opportunities to the market but also intensify risks. Macroeconomic factors, Federal Reserve policy dynamics, inflation trends, and global regulatory policies are all key variables affecting the future market.
Through detailed analysis of the current market, it is evident that although Bitcoin's anti-inflation and hedging attributes have been fully leveraged in this round of bull market, the driving forces and challenges of this bull market are more complex and diverse than ever before. Whether it’s the entry of institutions or the FOMO sentiment of retail investors, both can amplify the potential risks of market bubbles while contributing to market growth. Therefore, when investing in Bitcoin and other crypto assets, investors need to adopt cautious strategies and closely monitor market signals to ensure returns while effectively controlling risks.
7. Future Investment Suggestions: Diversification Strategies and Risk Management
Based on the macro analysis of this bull market, the following strategy suggestions are provided for investors:
7.1 Long-Term Investment Strategy: Maintain Rationality and Patience in Holding
For investors who are optimistic about the long-term value of Bitcoin, accumulating positions in batches during the early and mid-stages of a bull market is a relatively prudent choice. Particularly under the potential boost of Trump's supportive policies for cryptocurrencies, future policy benefits will further enhance Bitcoin's market appeal. Long-term investors should maintain patience during market adjustments and consider medium to long-term investment cycles to avoid frequent trading due to short-term volatility.
7.2 Mid-Term Strategy: Capture Swing Opportunities, Set Take-Profit and Stop-Loss Levels
In the mid-term of a bull market, when price increases occur frequently, investors can adopt swing trading strategies. Utilize market fluctuations for buying and selling to achieve periodic profits. However, one must be cautious of the risks posed by sharp market volatility; it is recommended to set clear take-profit and stop-loss levels for each trade to mitigate potential losses due to changes in market sentiment.
7.3 Risk Management: Focus on Policy Changes, Adjust Positions
The uncertainty of policies has always been a source of risk in the cryptocurrency market. Although Trump's attitude may be beneficial to the crypto market, future regulatory policies still pose risks of changes, especially under scrutiny from the SEC and other international regulatory bodies. Therefore, it is recommended that investors keep a close eye on policy changes and maintain appropriate cash positions to flexibly adjust their holdings to cope with sudden policy risks.
7.4 Diversification of Investment Portfolios: Balancing Traditional Assets and Crypto Assets
In this round of bull market, although Bitcoin's characteristics as a safe-haven asset are gradually recognized, its high volatility cannot be ignored. Investors should avoid investing all their funds in the cryptocurrency market but rather diversify their asset allocation to balance crypto assets and traditional assets, thereby improving the overall risk resistance of their investment portfolios. Traditional market assets like bonds and gold can serve as hedging tools to reduce the overall risk brought by crypto asset volatility.
8. Summary Outlook: The Brightness and Concerns of the New Bull Market
Overall, in 2024, the Bitcoin market is experiencing a new bull market explosion driven by Trump’s support and changes in the global economic environment. Bitcoin's positioning as 'digital gold' is increasingly established, attracting participation from a large number of institutional and individual investors, while the depth and breadth of the crypto market are gradually expanding. In this new round of bull market cycle, the market is showing unprecedented vitality, and it is expected that the bull market may continue for a long time under favorable policies and a tightening global economy.
However, market prosperity often also means increased risks. Investors should be aware of the high volatility of crypto assets and the uncertainty of policies, and avoid blindly chasing prices due to market upswings. In the future, investors need to find a balance between market sentiment and the macro environment, achieving long-term stable returns through rational layout and prudent operations.
The arrival of the new bull market has brought unprecedented opportunities to the cryptocurrency market, but successful investment relies on a profound understanding of market trends and prudent risk management. In a market environment filled with both opportunities and challenges, only a stable and cautious investment strategy can capture true long-term value in the ever-changing crypto market.
