1. Trump’s Pro-Crypto Stance Sparks Market Optimism:
During his campaign, President-elect Donald Trump vowed to make the U.S. the “capital of crypto,” rallying enthusiasm among crypto investors. Following his election on November 6 as the 47th President of the United States, both the cryptocurrency market and U.S. stock market experienced a substantial uptick, with key indices—Dow Jones, Nasdaq, and S&P 500—closing at record highs.
2. Bitcoin’s Record-Breaking Rise:
Bitcoin (BTC), the largest cryptocurrency by market cap, surged past $75,000 on November 6 and nearly reached $90,000 by November 12. The cryptocurrency market’s total value has now exceeded $3 trillion, driven by a favorable outlook on Trump’s policies. However, the crypto community remains cautiously optimistic, with some waiting to see if Trump will fulfill his campaign promises to the industry.
3. Federal Reserve Interest Rate Policy in Focus:
Beyond sentiment, the Federal Reserve’s interest rate policy will also influence capital flows into crypto. Trump has openly expressed dissatisfaction with current Fed Chair Jerome Powell, and many are watching to see how Trump’s administration might influence Fed policy regarding interest rate cuts and broader economic reforms.
4. Correlation Between Trump’s Election and Bitcoin’s Gains:
Throughout the close race between Trump and Harris, Bitcoin’s price appeared to respond to Trump’s polling performance. When Trump’s chance of winning appeared slim, BTC dropped 3%. After his win was confirmed, Bitcoin spiked over 7%, reaching a new high of $75,409. BTC options activity also surged before and after the election, signaling investors’ anticipation of market volatility.
5. Broader Crypto Market Impact:
The election-driven optimism extended to other leading assets, including Ethereum (ETH), Solana (SOL), and Binance Coin (BNB). ETH surged past $2,800, while SOL and BNB recorded impressive gains. Dogecoin (DOGE) also rose, supported by Trump’s ally Elon Musk, who voiced his support for Trump and Dogecoin on social media, further fueling market momentum.
6. Potential for Long-Term Influence:
Trump’s election has injected significant momentum into the crypto market, yet analysts question whether this effect will last. While Trump has made pro-crypto commitments, including opposing a government-led digital dollar and supporting the Bitcoin Strategic Reserve Act, implementing these promises will require time, congressional support, and navigating regulatory hurdles.
7. Impact of Federal Reserve’s Monetary Policy on Crypto:
With the Fed’s next interest rate meeting scheduled for November 8, the market widely anticipates a 25-basis-point cut. While Trump has previously criticized Powell, the Fed’s independence limits the president’s direct influence on monetary policy. Nonetheless, the Fed’s ongoing rate cuts are expected to continue into 2025, which could provide liquidity for risk markets like crypto but also raise inflationary concerns.
8. Long-Term Crypto Outlook Amid Structural Changes:
The combination of Trump’s pro-crypto stance, anticipated regulatory shifts, and Federal Reserve monetary policy decisions creates a complex environment for the crypto market. While interest rate cuts may bring more capital to crypto assets, inflationary pressures could pose economic challenges. Additionally, the upcoming Bitcoin halving event in 2024 traditionally aligns with the start of a new bull market cycle, adding further anticipation for growth in 2025.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please comply with local regulations.
