Table of Contents
ToggleMacroeconomic headwinds exceed expectations
After Donald Trump's victory in the November U.S. presidential election, Bit quickly hit a new all-time high. However, since mid-December, macroeconomic headwinds have impacted the market, causing K33 analysts to question their previous expectation that Trump's inauguration would be a "buy the rumor, sell the news" opportunity.
K33 previously advised investors to sell Bit on January 20th, the inauguration day, as the market had high expectations for Trump's campaign promises to support cryptocurrencies, but the reality is that the political process in Washington often moves slowly.
However, as the inauguration approaches, the appeal of using it as a selling opportunity has diminished. K33 analysts Vetle Lunde and David Zimmerman stated in a report written for clients on Tuesday that the market is weighing the potential inflationary impact of Trump's tariff rhetoric, as well as the potential boost to risk assets this year from tax cuts and favorable crypto policies.
Bit price fluctuations
Bit reached a high of $108,000 on December 17th, but then fell nearly 18%, dropping to a low of $89,000 on Monday. This decline was influenced by the surge in 10-year Treasury yields, the strengthening of the U.S. dollar, and the "reduced expectations of a Federal Reserve rate cut" against a backdrop of rising inflation expectations, putting pressure on Bit and global markets.
Bit rebounded somewhat on Tuesday, trading at $96,880 at the time of writing. K33 analysts stated:
"The enthusiasm of November has faded, and with the S&P 500 index recouping its post-election gains, Bit has also fallen to a two-month low. Our monthly outlook had suggested selling at the inauguration, but now we are revising our strategy, believing that the appeal of selling Bit at the inauguration has significantly diminished, unless new momentum emerges in the coming days."
Market reaction to Trump's two terms
Comparing the post-election market reaction to Trump's two terms, analysts noted that the S&P 500 index initially mirrored the 2016 market reaction. At that time, the index stabilized at its mid-December highs, with relatively low volatility during the inauguration period.
However, the market trajectory diverged significantly after the December 18th Federal Open Market Committee (FOMC) meeting. Analysts stated: "The market's enthusiasm for Trump from November to mid-December was an early reaction, but since then, a more conservative and cautious sentiment has prevailed."
During his first term, Trump often emphasized the stock market's performance, using it as an indicator of economic growth, which benefited from his tax cuts, deregulation, and trade agreements. Analysts expect this narrative to resurface in his second term. K33 analysts concluded:
"We remain optimistic about Trump's long-term impact on Bit."
