In the US presidential election held last week, Donald Trump, the Republican candidate, was elected as the 47th President of the United States. With the change of the leader of the world's superpower and the country that determines the direction of economic policies, the so-called "Trump trade" beneficiary stocks soared in the financial markets. Cryptocurrencies and Bitcoin were one of them.
On the day of the vote count, the price of Bitcoin, which was hovering around $67,000, began to rise gradually as the vote count results showed Trump leading in 6 battleground states, breaking through $70,000. The next day, it rose to $76,000, and on the 10th, it broke through $80,000.
The explosive inflow of funds into Bitcoin spot exchange-traded funds (ETFs) has strengthened the market's buying pressure. Bitcoin is currently fluctuating around $82,000 today (11th), a new all-time high.
What is the relationship between Trump's election and the rise of Bitcoin? To understand this, we need to look at the cryptocurrency-related pledges Trump made as a candidate. He made 8 major pledges, including ▲Firing Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC), on his first day in office ▲Stockpiling Bitcoin as a national strategic reserve asset ▲Abolishing the capital gains tax on Bitcoin ▲Supporting the Bitcoin mining industry ▲Relaxing cryptocurrency regulations ▲Launching a presidential cryptocurrency advisory council ▲Prohibiting the issuance of central bank digital currencies ▲Commuting the sentence of Silk Road founder Ross Ulbricht.
The most impactful of these is the pledge to stockpile Bitcoin as a strategic reserve asset for the US. This declaration, while not particularly difficult for the president, has the meaning of elevating Bitcoin's status.
If the US treats Bitcoin this way, it is highly likely that other countries, in addition to El Salvador and Bhutan, which are currently strategically accumulating Bitcoin, will also consider buying Bitcoin. From a practical standpoint, it would also mean preventing the 200,000 or so Bitcoins currently held by the US from being sold as market supply. US Senator Cynthia Lummis has also introduced a bill to designate 1 million Bitcoins as a strategic reserve asset over 5 years.
What will the future price of Bitcoin be? With this recent surge, Bitcoin has surpassed Meta (formerly Facebook) to become the 9th largest asset in the world by market capitalization. It is unusual for an asset of this size to rise 20% in just a week. Of course, some correction is possible, but experts expect the upward trend to continue for the time being. At the November FOMC meeting, Federal Reserve Chairman Jerome Powell also indicated that the interest rate cut trend that began in September will be maintained, so the investment environment is also positive.
Altcoin Season Index Surges from 23 to 39
While the rise of Bitcoin is good news, global cryptocurrency investors are showing even more enthusiasm for the rise of altcoins. This is because there has been no significant "altcoin season" this year. According to the Blockchain Center's Altcoin Season Index, the index, which had fallen to 23 on November 2, surged to 39 as of the 9th.
This indicator calculates the 3-month moving average of the price appreciation of the top 50 cryptocurrencies by market capitalization, and counts the number of altcoins that have outperformed Bitcoin. An Altcoin Season Index above 75 indicates an "altcoin season".
The Trump effect also extended to the leading altcoin Ethereum (ETH). Ethereum has risen 29% in the past week, and its increase from the beginning of the year to the present is about 39.72%. It had risen 10% from the beginning of the year to just before the US election, but the Trump effect has led to about three times that amount of increase.
The legacy Layer 1 altcoin Cardano (ADA) also recorded a record-breaking 76.38% increase in the past week. However, as of the 11th, ADA's year-to-date increase is -0.81%. After recording over 70% negative returns for the year, the price has been pulled up to the breakeven level due to the Trump effect.
Among the relatively newer Layer 1 coins, Sui (SUI) and the meme coin Neuro (NEURO) have reached new all-time highs this week. The longer the Bitcoin uptrend lasts, the more altcoins are expected to set new highs.
CPI and Other Macroeconomic Indicators to be Released...Focus on Powell's Speech
This week, US consumer price index (CPI) and producer price index (PPI) data will be released. However, since the Fed has already confirmed its long-term interest rate cut stance at the November FOMC, even if the CPI comes out high, it is unlikely to have a significant impact on the market.
Instead, the market is more focused on the speech by Federal Reserve Chairman Jerome Powell to be released on the 14th. The Fed currently holds the key to providing market liquidity, in addition to interest rate decisions, through the suspension of quantitative tightening (QT). It has not yet disclosed the detailed conditions or schedule for suspending QT.
On the 12th and 13th, cryptocurrency mining companies such as Marathon Digital, Bitfarms, Hut8, and Bitcoin Depot are scheduled to release their earnings. I hope all readers have a successful investment this week.
