Original Title: "The 'Trump Deal' Stimulates the Rise of Bitcoin"
Author: Fu Rao, Executive Director of the Hong Kong International New Economy Research Institute
Caption: Trump's vision of establishing a "Bitcoin superpower" has instilled confidence in cryptocurrency investors.
With Trump's re-election as the US president, the price of Bitcoin has quickly broken through multiple resistance levels. This phenomenon is driven by both short-term technical factors and the impact of Trump's support for cryptocurrencies. This article will delve into the logic behind the rise in Bitcoin prices from both a technical and fundamental perspective.
From a technical perspective, the price of Bitcoin has shown a strong upward trend in the short term, stimulated by Trump's election. The price of Bitcoin has quickly broken through the support level of the 10-day moving average and has continued to operate above the 5-day moving average, showing a clear bullish momentum. The active buying demand from investors has driven the price upward, which has been particularly evident in the days following Trump's election, and the trading volume has also increased significantly in the short term.
From a fundamental perspective, Trump's campaign promises regarding cryptocurrency policies have become a key driving factor for the rise in Bitcoin prices. Specifically, Trump's promises include the following five key points:
(1) Reorganizing the regulatory authorities: Trump has clearly stated that on his first day in office, he will dismiss the current Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, and appoint a new Chairman to lead the SEC. This move indicates that Trump will actively change the current government's strong regulatory stance on cryptocurrencies, creating a more relaxed environment for the development of the cryptocurrency market.
(2) Establishing a Bitcoin reserve: Trump has also stated that he will establish a strategic Bitcoin reserve for the US government, a move that will make the US government a direct participant in Bitcoin, driving up the price of Bitcoin.
(3) Commitment to the long-term value of Bitcoin: Trump has repeatedly advised his supporters "not to sell your Bitcoin" and pointed out that Bitcoin has the potential to surpass the market capitalization of gold in the future.
(4) Rejection of CBDC: Trump has emphasized that there will "never be a central bank digital currency (CBDC)" during his tenure. This stance aligns with the distrust of traditional financial institutions among cryptocurrency supporters, and also strengthens the appeal of Bitcoin as a decentralized asset.
(5) Balance between Bitcoin and the US dollar: Regarding the question of whether Bitcoin threatens the US dollar, Trump has stated that "Bitcoin does not threaten the US dollar" and has criticized the current government's policies as the real threat to the US dollar's status. His policy stance is seen as creating a stable development space for the Bitcoin market.
The above commitments demonstrate Trump's supportive attitude towards Bitcoin and cryptocurrencies, particularly his vision of establishing a "Bitcoin superpower", which has instilled confidence in cryptocurrency investors. Furthermore, Trump's election has attracted more short-term capital into the market. Therefore, the influx of speculative capital has amplified the price volatility of Bitcoin in the short term.
Potential Risks Cannot Be Ignored
In the short term, due to the policy support promised by Trump, the market expects Bitcoin to maintain an upward trend, especially after Trump has expressed clear support for Bitcoin and cryptocurrencies, which has continued to attract capital inflows. However, potential risks should also be noted:
First, if Trump strengthens the regulation of cryptocurrencies after taking office, it may put pressure on the upward trend of Bitcoin. Although Trump's policy stance currently has a positive attitude towards cryptocurrencies, if the changes in the regulatory authorities have an adverse impact on cryptocurrencies, the market sentiment may be suppressed.
Secondly, the Federal Reserve's policy remains a major variable in the price trend of Bitcoin. If the Federal Reserve's policy shifts from easing to tightening in the future, it may reduce market liquidity and put pressure on risky assets. If Trump's economic policies cause inflation risks in the US to rise, prompting the Federal Reserve to tighten monetary policy in the future, the withdrawal of funds from the market may lead to a decline in Bitcoin prices.
Furthermore, the large amount of speculative capital in the market may lead to short-term price corrections. Trump's policy stance has attracted a large number of investors into the Bitcoin market, but these funds have high liquidity, and when the market reverses, it may trigger a rapid correction. Investors should be cautious in this situation to prevent potential volatility risks.
In summary, the combined effect of technical and fundamental factors has led to a strong upward trend in Bitcoin prices in the short term. Trump's related commitments, including the dismissal of the SEC Chairman, the establishment of a strategic Bitcoin reserve, the reduction of anti-cryptocurrency regulation, and the emphasis on the value of Bitcoin, have all become the driving force for investors to be bullish on Bitcoin. However, amid the optimistic sentiment, market risks still exist, and changes in regulatory policies and market liquidity will be potential variables in the future trend of Bitcoin. Overall, the rapid rise in Bitcoin prices after Trump's election reflects the market's positive response to his policy support, and the future direction of policies and changes in market sentiment will require close attention.
