President-elect Donald Trump’s recent victory and pledge to establish the U.S. as a “crypto capital” have energized investor sentiment. Following his election on November 6 as the 47th U.S. President, both crypto and traditional markets surged, with major indices like the Dow Jones, Nasdaq, and S&P 500 reaching record highs.
1. Bitcoin’s Historic Surge:
Bitcoin (BTC) crossed $75,000 on November 6 and climbed close to $90,000 by November 12. The cryptocurrency market’s total valuation now surpasses $3 trillion, driven by the positive outlook on Trump’s policies. While optimistic, many in the crypto community are cautiously awaiting tangible steps toward his campaign promises.
2. Spotlight on Federal Reserve Policy:
The Federal Reserve’s interest rate stance is a crucial factor for crypto market inflows. Trump has been openly critical of current Fed Chair Jerome Powell, and investors are keen to see if his administration will influence Fed policy, particularly in the areas of interest rate reductions and broader economic reforms.
3. Correlation Between Election Results and Bitcoin Movements:
Bitcoin’s price fluctuations aligned closely with Trump’s polling performance. During the race with Harris, BTC dipped by 3% when Trump’s chances appeared low. Following his confirmed win, BTC surged by 7%, reaching $75,409. Options activity around BTC rose both before and after the election, reflecting heightened investor anticipation.
4. Broader Market Reactions:
Optimism following the election has extended to other major cryptocurrencies, including Ethereum (ETH), Solana (SOL), and Binance Coin (BNB). ETH breached $2,800, while SOL and BNB also saw strong gains. Dogecoin (DOGE) was buoyed by Trump’s ally Elon Musk, who vocalized support for both Trump and DOGE, amplifying the market’s positive momentum.
5. Prospects for Long-Term Impact:
Trump’s election has added momentum to the crypto sector, though analysts remain uncertain about its longevity. His pro-crypto stance includes opposition to a central bank digital dollar and support for the Bitcoin Strategic Reserve Act. However, implementing these promises will require time, legislative backing, and navigating regulatory complexities.
6. Influence of Federal Reserve Monetary Policy on Crypto:
The Fed’s next meeting on November 8 is widely expected to result in a 25-basis-point rate cut. Although Trump has previously criticized Powell, the Fed operates independently, limiting direct presidential influence. Nevertheless, ongoing rate cuts anticipated through 2025 may increase liquidity in markets like crypto but could also heighten inflation risks.
7. Long-Term Outlook Amid Structural Market Shifts:
Trump’s pro-crypto agenda, regulatory adjustments, and Federal Reserve policy shifts contribute to a layered landscape for the crypto sector. While lower rates may increase capital inflow into crypto, inflation remains a concern. Additionally, the Bitcoin halving event in 2024—historically tied to bull markets—adds to the growth outlook for 2025.
Disclaimer: This content is for informational purposes only and does not constitute investment advice. Please adhere to local regulations.