The prediction of a potential crash on January 20 when Trump takes office has indeed drawn significant attention from investors. The market tends to be sensitive to political changes, especially during the inauguration of a U.S. president, when investors usually reassess the impact of policy directions on the market.
How to view the potential crash triggered by Trump's presidency?
1. Market Impact of Political Changes:
• Policy Uncertainty: As a former president, Trump does have some influence on the economy, but changes in the new administration's policies could still have a significant impact on the market. For example, tax policies, regulatory policies, and cryptocurrency policies could all trigger market unease.
• Market Sentiment: Political changes often exacerbate market uncertainty, particularly in high-risk markets like cryptocurrencies, where sentiment can be volatile. Investors may choose to withdraw due to concerns over policy changes, leading to market sell-offs.
2. Historical Experience:
• Market Inertia: Historically, the market sometimes experiences significant fluctuations during the early stages of a political transition, but this does not necessarily lead to a crash. For example, in the months following a U.S. presidential election, although there have been severe fluctuations, many markets also rebound in the short term. Therefore, a single event or date does not completely determine market trends.
• Trump's Influence: Trump's presidency may indeed trigger fluctuations in certain areas, especially regarding regulatory policies in the stock and cryptocurrency markets, but this does not necessarily mean the market will crash. Investor sentiment often relies too heavily on specific expectations while overlooking changes in macroeconomic factors and market fundamentals.
3. Special Characteristics of the Crypto Market:
• Independence and Volatility: The cryptocurrency market is more volatile compared to traditional stock markets, with a shorter time window for policy impacts. If Trump's policies directly affect cryptocurrency regulation, it may lead to short-term price fluctuations, but in the long run, the crypto market has been maturing, and regulatory news may not directly determine market trends.
• Capital Liquidity: The capital flow in the cryptocurrency market is relatively flexible, and many institutional investors play a significant role in the crypto market. Short-term political uncertainty may prompt capital to temporarily exit, but that does not mean the market will crash as a result.
My View:
• Short-Term Risks: Indeed, the political changes on January 20 may bring certain market fluctuations, especially for short-term investors who may face the risk of a pullback. Therefore, if you are a short-term investor, you might consider moderate position control to avoid blindly increasing your holdings in an uncertain political climate.
• Long-Term Opportunities: For long-term holders, the short-term fluctuations triggered by political events often do not affect the long-term development of cryptocurrencies, especially major currencies like Bitcoin. Market turbulence can often present buying opportunities, particularly at the current tail end of a bear market.
Overall, whether Trump's presidency will trigger a crash is hard to predict, but from a historical perspective, market reactions often tend to be too extreme and too short-lived. If you are optimistic about long-term development, you can remain calm and not panic excessively. However, for short-term traders, it may be necessary to be more cautious, moderately adjust positions, and reduce the impact of short-term fluctuations.