After Trump won the election, BTC hit new highs for two consecutive days, reaching a maximum of $76,243.
Written by: Mu Mu
"Let's make America the capital of crypto", Donald Trump's words during the presidential campaign ignited the enthusiasm of crypto asset players, and the crypto asset market once staged a "Trump deal". On November 6, this Republican representative was finally successfully elected as the 47th President of the United States, and both the crypto market and the US stock market took off.
Wind data showed that as of the close of the U.S. stock market on Wednesday, the Dow Jones Industrial Average was at 43,729.93 points, up 3.57%; the Nasdaq was at 18,983.47 points, up 2.95%; and the S&P 500 was at 5,929.04 points, up 2.53%. All three major U.S. stock indices closed at record highs.
According to Coingecko data, Bitcoin (BTC), the top cryptocurrency in terms of market value, broke through $75,000 on November 6, and then rose to around $76,240 the next day, setting a new all-time high for two consecutive days. The total market value of the cryptocurrency market has also returned to $2.6 trillion, just one step away from the all-time high of $3 trillion (November 2021).
The crypto community is optimistic about the market following Trump’s election as president, but some are calmly watching whether the “crypto president” can deliver on the promises he made in his previous efforts to win over crypto voters.
In addition to sentiment, the Federal Reserve's interest rate decision is also closely related to the inflow of funds. The market is also paying attention to how the new president will affect the pace and magnitude of the Fed's interest rate cuts. After all, Trump has expressed his dissatisfaction with the current Federal Reserve Chairman Powell on many occasions in public.
Trump wins election, BTC hits record high
The U.S. presidential election, which the crypto asset market has been eagerly awaiting, finally has its results. Trump ultimately won the election with 277 votes and earned a ticket to return to the White House.
In the stalemate between Trump and Harris, the Bitcoin (BTC) market showed a positive correlation with Trump's chance of winning. A few days before the final voting day, when polls showed that Trump's chance of winning was 1% behind his competitor Harris, BTC immediately stopped its upward trend and fell by 3%. On November 6, Beijing time, when the results came out, when Trump received more votes, BTC immediately rose strongly, setting a record high of $75,409, with a 24-hour increase of more than 7%.
In addition, BTC options holdings also increased significantly before and after the election results were released, suggesting investors' strong expectations for market fluctuations in the aftermath of the U.S. election. Crypto options exchange Deribit’s Bitcoin Implied Volatility Index (DVOL) rose to an annualized 63.24%, its highest level since late July, according to TradingView.
BTC options open interest rises
As of 17:00 on November 7, in addition to BTC and the US dollar stablecoin USDT, the top 5 crypto assets in the market value, ETH (Ethereum), SOL (Solana), and BNB (BNB Chain) also performed very impressively. ETH regained $2,800 after 3 months, with the highest 24-hour increase of over 8%; SOL once exceeded $190, with a 24-hour increase of 3.8%; BNB once again hovered around the $600 mark, with a 24-hour increase of 2.7%.
In addition, the leading project of the Meme coin sector, DOGE (Dogecoin), also broke through $0.203 due to the presence of Elon Musk, a supporter of Trump. The high point of the currency this year was $0.220. The CEO of Tesla was the most well-known KOL of Dogecoin in the last round of crypto bull market, and his remarks affected the price of DOGE several times. Now, Musk is a "hard fan" of Trump. He not only personally called for him on various stages, but also took out $75 million to support the Republican Party.
DOGE had risen 14% on a certain day in the previous week. The potential stimulus was that Musk expressed his support for Trump's election and announced that he would set up a Department of Government Efficiency. The abbreviation of this department, D.O.G.E., happened to be exactly the same as the letters of Dogecoin's code DOGE. The big boss also showed the DOGE avatar in a tweet after attending Trump's rally. Dogecoin rose from $0.14 to $0.16 on the same day.
On November 6, Musk sent several tweets in support of Trump. When Trump's votes were ahead of Harris, Musk posted "Game, set and match" to imply that "the game is over and the winner is determined", and DOGE soared again, with the largest increase exceeding 20%.
How long will the market influence of the “Crypto President” last?
There is no doubt that Trump's election has given a shot of stimulant to the crypto asset market, which has been volatile for more than half a year. A big reason for this is that the president has repeatedly used "friendly policies" to win the votes of American crypto enthusiasts during the election period, and will take a more liberal attitude towards the crypto industry than the Democratic Party represented by Harris.
Trump's "crypto commitment" includes not allowing the creation of a government-led digital dollar, but supporting the U.S. dollar stablecoin bill; replacing SEC Chairman Gary Gensler, who has repeatedly cracked down on crypto financial companies, to reverse the regulatory hostility toward the crypto industry; protecting the rights of American citizens to own and custody crypto assets, etc.
The most exciting of his promises to the community is that he will pass the Bitcoin Strategic Reserve Act, which will require the US government to stop selling Bitcoin and hold it for a long time. He also stated that he would establish a "Presidential Advisory Committee on Bitcoin and Cryptocurrency."
Given Trump’s friendly attitude towards the crypto industry, Standard Chartered Bank analyst Geoff Kendric once predicted that BTC could reach $125,000 after Trump wins the election.
PlanB, the creator of the Bitcoin Stock-to-Flow (S2F) model, is even bolder and even gave an upward time. He predicted that if Trump is elected president in November, BTC will reach $100,000; with the influx of BTC ETF funds, BTC will soar to $150,000 in December; by March 2025, the price will break through $500,000.
Now that Trump's presidency is clear, whether these promises can be fulfilled is part of the basis for many market observers to judge the bull and bear markets in the future.
Many analysts believe that the election-driven rise in Bitcoin is more of a temporary phenomenon. Analyst The Giver pointed out that based on the limited amount of market funds, the surge in BTC prices will be limited to the limited market capacity in the fourth quarter of 2024 and is unlikely to continue into the next year.
Other analysts reminded market participants that even if Trump fulfills his promise on encryption, it will have to be implemented gradually during his four-year term, and there are many restrictions. For example, the president's appointment of the cabinet and his right-hand men to assist in governance require Senate approval; the president's promotion of economic policy reforms or amendments to certain economic regulations must also be completed through congressional legislation. "It will take a long time to put what you say into practice, but overall, the US government led by Trump is likely to reduce regulatory resistance to the development of the encryption industry, including the technology industry, in the United States."
If the results of the U.S. presidential election are seen as a turning point for the crypto market, then the longer-term market trend will be influenced by the Federal Reserve’s interest rate decision, whose monthly results will bring about fluctuations in the financial market.
The Fed's interest rate meeting will be held in the early morning of November 8th, Beijing time. The market predicts that the Fed will cut interest rates in November. According to the CME "Fed Watch" forecast, the probability of a 25 basis point cut in the federal funds rate in November is 99.7%, and the probability of maintaining the current interest rate unchanged is 0%. However, "whether the Fed's interest rate decision will be affected by the new president's inauguration" has become one of the market's concerns.
It is expected that Federal Reserve Chairman Powell will answer questions about how the election affects the Fed at a press conference after the Federal Open Market Committee meeting this week.
This is also a topic of concern to financial market participants, not only because Powell was criticized by Trump during his last presidency and this year's campaign, but also because Trump believes that the president should have a "say" in the Fed's interest rate decisions.
However, US law still provides procedural protection for the Fed's independent decision-making. And Trump also stated in October this year that he did not think he should be able to order the Fed to do anything.
The only way Trump can legitimately influence the Fed is by appointing key positions. Even if he is dissatisfied with Powell, it will take at least until 2028 to kick the current chairman out of the Fed. Powell's term as Fed chairman will end in May 2026, and his position on the Fed Board will be vacant in January 2028.
In terms of both time and space, the possibility of Trump directly influencing the Fed's interest rate decision is still very limited, and it is highly likely that the Fed will continue to cut interest rates until next year.
Jan Hatzius, chief economist at Goldman Sachs, believes the Fed will follow through on its earlier hint of two rate cuts by the end of the year, and he expects this situation "to continue in the first half of 2025." He also pointed out in a report, "We expect the Fed to cut interest rates four times in a row in the first half of 2025, and the final interest rate will fall to 3.25%-3.5%."
For the crypto asset market, the Fed’s interest rate cut is a “double-edged sword”. On the one hand, this quantitative easing policy will, to a certain extent, bring more funds from the storage and bond markets into the risk market; but on the other hand, the inflation risk caused by the interest rate cut is also a manifestation of economic recession, which is ultimately not conducive to the financial market.
In the short term, the dust settling on the US presidential election and the release of the Federal Reserve’s November interest rate decision will be an important week that will affect the history of cryptocurrencies. The crypto market will also complete the "Bitcoin half-year reduction" in 2024 under the superposition of this double buff. According to the historical laws of this market, the year after the half-year reduction will usher in a new bull market.
