Trump's economic policies and the performance of the cryptocurrency market
Trump's economic policies mainly include tax cuts and deregulation, protectionist trade policies, energy independence, fiscal expansion, debt risk management, and immigration policies. These 'America First' policy ideas, while promoting development in certain areas domestically, pose significant challenges to the global economy and financial order, potentially leading to chaos and uncertainty.
Economic challenges at home and abroad for the United States
There are several key points in Trump's policies that will have a profound impact on the US economy. First, Trump advocates for reducing taxes on businesses to boost domestic production while increasing tariffs on imported goods and implementing protectionism. Although this can temporarily stimulate domestic economic growth, raising tariffs and controlling immigration may drive up prices, leading to inflation. Furthermore, the Federal Reserve's interest rates remain relatively high, making it more difficult to cut rates, and fiscal expansion under high interest rates will face greater challenges, potentially worsening the debt situation.
Meanwhile, the US financial markets are facing greater pressure. Even though economic data shows that US employment and economic conditions are still good, the resurgence of inflation may make it difficult for the Federal Reserve to significantly lower interest rates in the short term. The market generally believes that the pace of interest rate cuts in the second half of 2024 will slow down, and it may not be realized as planned.
Performance of the US stock market and the dollar
Despite facing uncertainty, global market investors remain optimistic about the US economy. In November, the US stock market performed strongly, with the Nasdaq, Dow Jones, and S&P 500 indices rising by 6.21%, 7.54%, and 5.74%, respectively. Notably, the Russell 2000 index (RUT2000) performed exceptionally well, reaching an all-time high. Additionally, US Treasury yields slightly decreased, indicating a temporary reduction in market concerns about the risks associated with US debt.
The dollar index continues to rise, reflecting the global flow of funds into the US. In November, the dollar index rose to 105.74, showing global capital's optimism about the US market. Compared to the dollar, the euro, yuan, and yen have all depreciated against the dollar. This also indicates that when seeking safe-haven assets, investors are more inclined to purchase dollar-denominated assets.
Trends in the gold and cryptocurrency markets
In contrast to the rise of the dollar and stock market, gold prices fell by 3.41% in November. This indicates that global investors' risk appetite is gradually increasing, with funds flowing into risk assets, including stocks and cryptocurrency. The cryptocurrency market, especially Bitcoin, experienced a historic surge in November.
In November, Bitcoin's price surged from around $70,000 to nearly $100,000, an increase of 37.42%. This upward momentum indicates that investor sentiment in the cryptocurrency market is recovering. Bitcoin's technical indicators also broke through long-standing resistance levels, entering a new phase of growth.
Liquidity and future prospects of the cryptocurrency market
The rise in the cryptocurrency market is attributed to a significant influx of funds. In November, inflows into the cryptocurrency market reached a historic high, with $5.4 billion coming from Bitcoin exchange-traded funds (ETFs) and $19.5 billion from stablecoin channels. The inflow through the ETF channel was particularly significant, providing strong support for the rise in Bitcoin prices.
Additionally, the US government's stance on cryptocurrencies has become increasingly positive. Several bills proposed by the Trump administration, particularly the (21st Century Financial Innovation and Technology Act) and the (Bitcoin Strategic Reserve Draft), demonstrate a strong intent to promote the legalization of crypto assets and support the development of blockchain technology. This policy shift provides long-term support for the cryptocurrency market.
With a substantial increase in liquidity, demand for Bitcoin in the market is also rising. After Bitcoin broke through the $100,000 mark, the market entered the so-called 'Altseason' phase, with other cryptocurrencies also beginning to show upward momentum.
Conclusion
Overall, while Trump's economic policies face many challenges, they still have a strong influence in the global market, particularly reflected in the strong performance of the US stock market and the dollar. In the cryptocurrency market, Bitcoin's price has also surged again, supported by strong liquidity and policy backing. In the near future, a bull market in cryptocurrencies is expected to continue, experiencing some volatility, but the overall upward trend will provide substantial returns for long-term investors.
