Trump's election as the new President of the United States has become the biggest political and economic topic in November. Unsurprisingly, the impact of Trump taking office is enormous, with his 'Trump 2.0' economic policy route, which is different from other parties, and strong support for cryptocurrency, reversing the previous trading logic of the market. Liquidity in the stock market began to flow into more sectors, and the frenzy in the cryptocurrency market is closely related to Trump. All of this seems to suggest that a new trading logic system is being born.
With the conclusion of the U.S. election, Trump has been re-elected as President, becoming the 47th President of the United States. Thus, the election boots have landed, and the U.S. will return to a right-wing development approach, alleviating global traders' concerns about election risks.
As traditional conservatives, the Republican Party advocates for tax cuts, revitalizing manufacturing and traditional energy industries, reducing government regulatory powers, and expelling illegal immigrants. The 'Trump 2.0' approach further adheres to the 'MAGA Party' policy concept.
From a policy perspective, Trump's policy approach is very similar to Reagan's, both being a combination of 'loose fiscal policy + deregulation + trade protectionism.' Reagan used this approach to lead the U.S. out of the stagflation environment following the oil crisis, promoting economic recovery and ultimately achieving the 'Reagan cycle' that continues to influence subsequent U.S. economic policies. Whether Trump can replicate Reagan's 'successful' path and pull the U.S. economy back from the brink of stagflation has become the most focused issue of his term.
The similarity between Trump's policies and Reagan's policies may become the main trading logic for the subsequent 'Trump trade,' which investors can continue to monitor.
Returning to the inflation data and Federal Reserve policy in November. On November 26, local time, the Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) meeting held from November 6 to 7. The minutes indicated a 25 basis point rate cut in November, in line with expectations. Meanwhile, the Federal Reserve emphasized that 'participants expect that if the data aligns with expectations, inflation continues to decline to 2%, and the economy remains close to maximum employment levels, then gradually shifting to a more neutral policy stance over time may be appropriate.' This 'more neutral policy stance' means that the Federal Reserve is no longer deliberately pursuing interest rate hikes or cuts, but instead conducting daily adjustments based on the market economy situation, which undoubtedly suggests that the Federal Reserve is optimistic about the U.S. economy emerging from recession and expects a future recovery.
In November, the U.S. stock market operated smoothly, making small incremental breakthroughs to historical highs. In the AI field, although NVIDIA (NVDA) exceeded expectations in its third quarter earnings report, it fell 5% in after-hours trading on the day of the announcement due to not being 'too much above expectations.' Currently, the market's attitude towards AI seems to be 'as long as it is not overly explosive, it is not below expectations.'
Since Trump's election, Bitcoin has been like a runaway wild horse, racing towards $100,000. The market's FOMO sentiment has been severe, only slightly easing in the last week of November. Against the backdrop of Trump calling for 'Bitcoin as a strategic reserve,' Pennsylvania was the first to pass the (Bitcoin Rights Act), and the market seems to have welcomed the 'Trump era' for cryptocurrencies, with cryptocurrencies becoming objects of legal protection in the traditional world, truly integrating into everyone's life.
If Trump's election brought Bitcoin to new heights, then Musk completely ignited the MEME track. With Musk joining the 'Trump 2.0' government team, three Musk concept coins saw a violent surge. Behind this brief episode, the longer narrative is that Musk, as a leader in technological innovation, may accelerate the advancement of cryptocurrency technology, such as promoting the integration of AI and blockchain.
Therefore, cryptocurrency rightly replaces AI as the new darling of the stock market in November, and people naturally look for opportunities related to cryptocurrency in the secondary U.S. stock market. Among the Bitcoin frenzy throughout November, the biggest winner that emerged is MicroStrategy (MSTR) — MicroStrategy's stock price soared more than 140% in November.
Source: StockCharts.com
MicroStrategy was initially a niche software company founded in the 1990s. After surviving the tech bubble of 2000, it entered a phase of stable business but had little room for significant growth until its CEO, Michael Saylor, became a Bitcoin believer around 2020, incorporating Bitcoin as a core strategy into the company's balance sheet. He successfully constructed his own 'Bitcoin-driven' company growth logic: Bitcoin occupies a significant proportion of the company's assets, and its value fluctuations directly affect the company's value. As Bitcoin prices rise, MicroStrategy's stock price increases significantly due to asset appreciation, with daily trading volume exceeding that of NVIDIA. Through leveraged capital operations, the company can issue new shares to sell for cash to buy more Bitcoin. During November, MicroStrategy raised $4.6 billion by issuing new shares and reinvested all of it into Bitcoin, pushing up Bitcoin prices, creating a cycle of buying Bitcoin - rising stock prices - borrowing or issuing new shares to buy more Bitcoin, closely linking shareholder interests with Bitcoin appreciation. The unexpected rise in MicroStrategy's stock price is essentially viewed by some investors as an indirect way to hold Bitcoin and they are willing to pay a premium for it.
Bitcoin has made MicroStrategy successful, and MicroStrategy has also made Bitcoin successful. Its frenzied bond issuance and stock selling to buy Bitcoin, along with its high-profile market style, propelled Bitcoin's rise from $70,000 to $90,000, just as the Bitcoin ETF boosted Bitcoin from $40,000 to $70,000. Therefore, MicroStrategy is also considered the biggest driving force behind Bitcoin's rise from $70,000 to $90,000.
Some investors believe that MicroStrategy has uniquely discovered a clever way to exploit loopholes in the fiat currency system, fully utilizing the inefficiencies of traditional capital markets to obtain leverage advantages against fiat currency, and perfectly merging it with Bitcoin's predictability, thus granting itself significant upside potential. In short, it is about using cheap and continuously expanding capital to acquire scarce assets with appreciation potential. Of course, this logic assumes that Bitcoin will inevitably succeed in the long term. As of the latest data, MicroStrategy currently holds 279,420 Bitcoins.
MicroStrategy's 'digital gold standard' strategy and capital operation model provide us with a new experimental paradigm. If market conditions continue to improve, this model could become an industry pioneer, guiding other companies to adopt similar strategies, accelerating the adoption of Bitcoin on corporate balance sheets, and promoting Bitcoin's recognition as a top predator of assets.
The market's rise has long led retail investors to sell Bitcoin in pursuit of the so-called high returns from meme coins, and Bitcoin has now become the main battlefield for whales. Some believe that the biggest risk to Bitcoin currently comes from whale sell-offs. As one of the largest whales, MicroStrategy's biggest sell-off risk lies in the forced liquidation of bonds due to falling Bitcoin prices, thus entering a self-reinforcing downward cycle for Bitcoin prices.
However, this argument overlooks MicroStrategy's bond structure. The bonds issued by MicroStrategy are convertible bonds, which belong to off-market leverage. Even if MicroStrategy cannot repay the debt three years later, creditors can only convert the debt into stocks and dump them in the stock market, which does not shake Bitcoin's price. Therefore, rather than worrying about MicroStrategy being forced to liquidate and sell Bitcoin to pay off debts, it might be better to worry about those buying MicroStrategy stock in the U.S. stock market.
Investor Victor Dergunov has clearly pointed out that although MicroStrategy has shown foresight, its stock is clearly in an overbought state and can be seen as a typical example of the bubble in the entire cryptocurrency field. Although Bitcoin has not yet peaked, reality has already sounded the alarm, reminding us what happens when the market heats up too quickly. The market's valuation of MicroStrategy will reach a clearer consensus, and this valuation should be significantly lower than its current level.
Of course, a more promising future is that we may see Bitcoin find a place on the balance sheets of thousands of companies, making MicroStrategy a financial pioneer recorded in history.
In November, against the backdrop of Trump's election as President of the United States, the economy exhibited multidimensional changes. The FOMC meeting lowered interest rates by 25 basis points, and there is a high probability that easing will continue in December, injecting liquidity expectations into the economy. Trump's economic team was formed and pushed forward, with its policy proposals expected to replicate the previous high-growth economic path. The U.S. stock market continued to rise and hit new highs, and the cryptocurrency market celebrated under Trump's favorable conditions, with Bitcoin approaching $100,000. MicroStrategy, due to its Bitcoin holdings and the exploration of new capital operation experiments, surged unexpectedly. Looking ahead, attention should be paid to the implementation intensity and rhythm of Trump's policies, as well as the impact of interest rate cuts on the economic structure. If Trump's commitments to the cryptocurrency industry are partially realized, $100,000 may not be the endpoint for Bitcoin prices, but merely a milestone in its upward trajectory. The road is winding, but the future is bright.
