Bitcoin Surpasses ATH Amid Trump’s Presidential Election Victory: An Analytical Perspective
The price of Bitcoin has surpassed its historical all-time high of $73,083, which was reached on March 13 of this year, topping the $84,900 mark on November 11. The price began to rise as Donald Trump claimed victory in the US presidential elections,.
The development on the cryptocurrency market in reaction to the outcome of the US presidential elections comes as the leading cryptocurrency – Bitcoin, experienced a period of considerable flux in the weeks preceding the event. The fact that Bitcoin has breached its ATH, which had remained for over half a year, with a new ceiling, proves that investor sentiment was heavily reliant on the results of the elections in the US. Investors are therefore scrambling to partake in the buying frenzy, pushing demand for the leading cryptocurrency, as well as its closest competitor – ETH, which has also demonstrated a new local ATH of the year at $2,629 on November 6.
Such interest towards digital assets can be explained by a combination of FUD, as well as anticipation of the actions that the new president of the United States will be taking in regards to both internal and external affairs. As the final ballots are being counted and the official announcement of the outcome of the elections is yet to be released, the market is preparing for the potential aftermath.
Key Takeaways
Bitcoin Reaches New Heights: Bitcoin has surpassed its previous all-time high, hitting $75,358 on November 6, amid a significant increase in investor interest following the U.S. presidential elections.
Trump’s Election Impact: Donald Trump's victory in the presidential elections has generated a positive reaction in financial markets, influencing Bitcoin and other cryptocurrencies as investors anticipate his economic policies.
Market Sentiment Shift: The outcome of the elections has led to a shift in market sentiment, with crypto investors expressing optimism about a potential new bullish cycle, contrasting with traditional investors who are more cautious.
Historical Context: The article highlights the historical influence of presidential elections on Bitcoin prices, drawing parallels to past events that have similarly affected the cryptocurrency market.
Bitcoin’s All-Time High
The weeks leading up to the elections in the United States proved to be quite turbulent for Bitcoin, which underwent a series of significant slumps. One of the most prominent of the latter came on October 27, after the price of BTC fell to $70.932. The main reason for the outflow was the strike carried out by Israel against targets deep inside Iranian territory.
After a brief period of recovery, which sent Bitcoin back into $63,000 territory, the cryptocurrency received a heavy blow and collapsed to $59,019 on October 10. The main reason for the sudden outflow of investors and the panic selloff then was the release of the US Consumer Price Index, which showcased poor performance for the economy and highlighted the re-acceleration of inflation to 2%. This sent cryptocurrencies into a downward spiral amid fears of US Dollar depreciation and higher credit loans.
Source: Coingecko
The king of crypto managed to regain positions in the following weeks and maintained a slow but steady rise to around the $69,000 mark, before sharply rising to $72,800 by October 30. However, investor sentiment changed quickly by the eve of the US elections, tumbling Bitcoin’s price to $67,000. The reason behind such a change was the dramatic rise in the odds of Donald Trump winning the elections. This sent many investors, fearful of his promises in economic and financial domains. Another reason teetering on the potential of Donald Trump’s win in the days prior to the elections was the release of statistical data, which showed that record numbers of wealthy Americans were seeking foreign citizenship to flee the country and migrate their capital.
Bitcoin has since recovered in price terms and is trading at $74,491 at the time of writing. The cryptocurrency currently stands at a market capitalization of $1.45 trillion. The recovery itself obliterated in excess of $370 million in short trading positions.
Impact of Trump’s Presidential Victory
The effect of Donald Trump’s victory on the global and American financial markets is considerably easier to predict than had Kamala Harris won. The reasoning behind such a conclusion can be found in the fact that Donald Trump had released a detailed plan of his economic development plan during his election campaign. Unlike Kamala Harris’ plan, which, upon close examination, hinged on a tax-centric approachaimed at middle class Americans, Donald Trump seems to be aiming for stabilizing the internal economy of the United States and promoting the re-industrialization of the country.
In terms of macroeconomic impact, Trump’s victory has already shifted gains in favor of American companies, as Tesla registered a 13% profit in pre-market trading hours before the election. This can be justified by the fact that the US Dollar will be appreciating in the short-term, showing a 1.4% uptick against the backdrop of the elections. This, however, will come at a cost as Trump starts putting his economic plan in motion, meaning higher tariffs on imports, especially from Europe and China.
The onset of a potential “trade war” is scaring investors, as the possibility of 10% to 20% tariffs on all imports, and as much as 60% tariffs on imports from China will, inevitably, bring about a reaction from the sanctioned states. Though Trump means well in terms of boosting internal jobs and slashing US hyper-reliance on foreign goods, the repercussions may result in any US goods becoming uncompetitive on the global market. This can be justified by the fact that virtually all production facilities were transferred from the US to China and Europe during the 90s and 2000s. As a result, it will take a very long time for US manufacturers to start competing with their rivals. A promised reduction of corporate taxes from 21% to 15% could attract big capital, but the adverse side effect would be an inflation of the already catastrophic national debt to as high as $58 trillion by the end of the decade.
In terms of cryptocurrencies, Donald Trump advocates the release of a stablecoin backed by the US Dollar.He has also stepped forward with the intention to create a “strategic national crypto stockpile” – a move meant to hoard Bitcoin supplies by the US government and never sell them. As a self-proclaimed “pro-crypto” candidate, Trump is a proponent of Bitcoin and other cryptocurrencies, calling on their supplies to be increased in the US Treasury.
Such a stance on crypto, as well as promises to impose national legislation for the regulation of the market, give every reason to believe that Trump’s election can signal the start of a new bullish cycle.
Reactions from Investors and Crypto Enthusiasts
In general, the reaction to the results of the US election is positive on the market, with most corporate sector players showing big gains. For instance, Palantir and ASTRA Labs jotted down 25% and 38% respectively against the backdrop of the elections.
Source: research.investors.com
Likewise, Trump Media stock spiked 44%, DJT stock rose 19%, Tesla stock surged 12%, and Nvidia(NVDA) rose 2.85%. However, the stock market across the ocean is reacting differently, with SPI Asset Management saying:
“With a renewed “America First” agenda, U.S. trade barriers are expected to escalate, pushing European leaders to consider their defensive economic measures.”
In terms of crypto market investor sentiments, Bitfinex analysts stated that they expect Bitcoin to soon top the $80,000 mark, quoting:
“Options market positioning indicates that over the past few weeks, end-of-year options have seen a significant rise in call open interest. The Dec. 27 expiry and calls with an $80,000 strike price have been the primary areas of interest.”
In general, crypto investors remain greedy, steering clear of the fear factor as some clarity returned to the global market in the aftermath of the elections.
"The Bitcoin community has long had a favorable view of Trump due to his relatively open stance on decentralized finance and cryptocurrencies,” as Zaye Capital Markets said.
As can be seen from the aforementioned sentiments, traditional investors from across the Atlantic are less than enthusiastic about the impact of Trump’s win. Crypto investors, on the other hand, are experiencing an uplift in sentiments after a protracted bearish period. The two opposing views can be best described by the peculiarities of the real-world and crypto economies. The global economy is far more interconnected and reliant on the US dollar, while the crypto economy abides by the laws of supply and demand. The latter are also influenced by real-world events.
The impact of presidential elections, as a real-world event, on Bitcoin prices can be traced throughout history. The best example is that of the 2016 elections, which saw Bitcoin jump from $718 to $18,000 at the end of the year.
Final Thoughts
Donald Trump is now going set up residence in the Oval Office for the next four years and hire a new administration, setting his economic and financial plans into action. Whether or not he follows through on his words regarding putting an end to global conflicts and stabilizing the US economy is yet to be seen. The markets are, however, reacting positively to the outcome of the US election, the crypto market in particular.
With broader macroeconomic implications still to be analyzed and witnessed, crypto investors are rallying, giving hopes that a new bullish cycle is imminent. Should that happen, the largely beleaguered crypto economy may witness a new phase of development, with projects and technological innovations based on blockchain. Should Trump take a proactive crypto-friendly stance, the decentralized economy may finally see regulation put in place and thus achieve wide-scale adoption on par with fiat.
