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At an unprecedented $76,000, Bitcoin achieves a new record peak shortly after Donald Trump’s re-election victory. Traders foresee the incoming administration pursuing a growth-oriented agenda that buoyed broader financial assets and fueled crypto’s ascent. As the digital currency climbed over 6% in a single day, many anticipate that the dovish Federal Reserve policy will keep tailwinds at investors’ backs.
Within the last 30 days, Bitcoin has surged by 21%, according to CoinGecko, with the gains extending beyond the top cryptocurrency. Meme coins and tokens from decentralized trading venues joined in, appreciating by double-digit percentages. Mirroring upbeat Wall Street, where stocks and bonds rose on expectations of continued economic expansion and fiscal stimulation under Trump, cryptocurrency markets cheered, anticipating supportive conditions. However, with Bitcoin reaching new highs, traders now eye the Fed’s next rate decisions for signals on maintaining crypto’s momentum into the foreseeable future.
Historical Patterns: Bitcoin’s Surges After Elections
Bitcoin has notably surged after each major US election since its 2009 inception, setting newer highs each time. Traders at QCP Capital observed this recurring spike, persisting beyond the rallies with BTC levels remaining above pre-election marks. “Given the present economic landscape and Bitcoin serving as an inflation hedge, we foresee this positive trajectory carrying into 2025,” stated a QCP message referring to a strengthening dollar.
The dollar index likewise elevated that July, swelling 1.2% to its loftiest in months. Treasury yields trailed suit, embodying market anticipation of expanded government outlays potentially fueling further economic growth.
Federal Reserve Rate Cuts
Following the aftermath of Trump’s victory, focus shifted to the Fed with a pivotal rate decision impending. The market forecasts a probable 0.25% cut, deemed likely to bolster Bitcoin by diluting the dollar and making alternative assets such as BTC more appealing. Generally, lower interest rates propel investors toward higher-risk, higher-reward holdings, frequently catalyzing price lifts for cryptocurrencies like Bitcoin.
Currently, odds on Polymarket overwhelmingly suggest a 25 basis point reduction, with nearly 97% of bets favouring it. Though some analysts caution the climbing Treasury yield, now at 4.48%, signals investor doubt over Trump policies’ inflation and deficit impacts.
“This yield hike displays investors foresee Trump’s strategy potentially leading to a budget shortfall and inflationary pressures,” noted Min Jung of Presto Research. The spotlight will be on Fed Chair Jerome Powell for clarity on upcoming monetary policy steering.
Will Hawkish policies dampen market optimism?
Despite widespread enthusiasm, analysts remain prudent, noting any hawkish signals from Powell could stifle bullish sentiment. An aggressive inflation stance could pullback markets as borrowing costs rise. “A hawkish tilt would dismay investors,” said Augustine Fan, SOFA Insights head. He worries bond sellers may resist if policy angers, elevating yields and pressuring the dollar, impacting Bitcoin and risky assets.
Meanwhile, potential responses to Trump’s trade policies introduce complex dynamics. If easing counters tariffs, global finance may shift drastically, meaningfully affecting the dollar and Treasury yields despite cryptocurrency bans in China. For Bitcoin, a loosening China could add volatility as it influences the dollar and yields despite trading prohibitions.
How Long Will Excitement Prevail?
While Trump’s strategies may benefit-risk holdings, some dealers question continuous cuts under his administration. Though an immediate boost, many doubt further reductions’ longevity. “Even with Trump possibly lowering the probability of additional cuts, the market continues pricing one or two more cuts this year and several next,” noted QCP Capital recently.
While the fate of Bitcoin and alternative digital currencies hangs in the balance, their trajectory remains interconnected with movements in mainstream finance and policy. As the Fed weighs interest rate decisions and the global economy undergoes flux, cryptocurrency markets are ascending to new heights. For the moment, Bitcoin pilots the surging tide as followers of distributed ledgers track each twist and turn of emerging realities under the current presidential administration. The coming episodes will further determine whether decentralized networks ultimately ascend to the dominant financial architecture or settle at the fringes of the established order.
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