Bitcoin Soars as Trump Wins: Historic Week for Crypto

London: 12 November 2024 (TraderMade): The past week has been a whirlwind in the crypto market, punctuated by political shocks, historic milestones in Bitcoin ETFs, and dynamic shifts across various assets.

With Donald Trump securing a second US presidential term, investors re-evaluate portfolios as markets respond to new economic and political expectations. From Bitcoin ETFs overtaking Gold to Tether entering commodities, the landscape is evolving rapidly, with crypto playing a central role.

Key Takeaways

• Trump’s US election victory sparked rallies across energy, banking, and crypto, with Bitcoin hitting new all-time highs.
• BlackRock’s Bitcoin ETF outpaced its gold ETF in assets, attracting $1.25 billion in net inflows last week alone.
• Tether expands into commodities trading with a $45 million oil deal, signaling blockchain’s push into traditional markets.
• The US Treasury is considering a “Strategic Bitcoin Reserve,” a bold move that could reshape the role of Bitcoin in national reserves.

Trump’s Victory Propels Markets

As Trump’s victory became apparent, Bitcoin and other high-profile assets surged, breaking through significant technical levels. BTC/USD spiked past key levels at $66,000, $72,000, $73,000, and $77,000, reaching all-time highs as market momentum gained strength.

The build-up to Election Day saw shifting odds, with betting platforms showing Trump overtaking a narrow lead to clinch a decisive win, largely driven by support from black and Latino voters focused on economic reform.

In this election, the silent majority was reflected strongly, and betting platforms proved to be accurate indicators. The election’s impact went beyond the immediate price surges. Trump’s message resonated with investors, especially regarding economic concerns like inflation and wealth inequality.

Cryptocurrencies became central to the “Trump trade,” pushing Bitcoin to outperform as demand spiked in the aftermath. Traditional Wall Street sectors like energy and banking joined the rally, while Bitcoin seemed uniquely poised to thrive under this administration.

Bitcoin ETFs

In a milestone for crypto assets, BlackRock’s Bitcoin ETF (IBIT) has outpaced its gold ETF in assets under management, underscoring Bitcoin’s increasing institutional appeal. From November 4 to November 8 alone, Bitcoin spot ETFs saw a net inflow of $1.63 billion, with BlackRock’s IBIT ETF contributing a massive $1.25 billion.

This surpassing of Gold in ETF inflows emphasizes the shifting perspective among investors, viewing Bitcoin as an essential component of a diversified portfolio. Furthermore, there’s significant buzz around a proposed bill advocating for a “Strategic Bitcoin Reserve” in the US Treasury.

If passed, the bill would see the US acquire one million Bitcoin over five years, a move intended to hedge against potential US dollar debasement and address a staggering $35 trillion national debt. This plan has sparked intense speculation as investors weigh the possible implications of such an unprecedented commitment to Bitcoin.

Tether’s Commodities Push and Altcoin Dynamics

Tether, a key player in stablecoins, has entered the commodities market with a $45 million trade in oil. This move is part of Tether’s broader strategy to diversify into new sectors, hinting at the expanding role of blockchain-based firms in traditional financial markets.

Meanwhile, altcoins are seeing renewed interest. Polymarket is witnessing high engagement, as analysts predict users will remain loyal following the high-profile US election event.

With Bitcoin at record highs, altcoins like Ethereum (ETH), Solana (SOL), and POL have seen increased buying activity as Bitcoin’s dominance slightly eases. On the trading desk, speculative interest in smaller assets is picking up, with traders taking profits from recent highs in Binance Coin (BNB), Maple (MPL), and SUI.

Technicals & Macro

BTCUSD Surge and Broader Market Trends

The rally to BTC’s recent highs reflects powerful technical momentum in the crypto markets. As investors digested Trump’s win, Bitcoin’s price momentum reached new levels, surpassing all-time highs without slowing down. BTC’s relative position to gold in the market cap is also closing, with Bitcoin currently at $1.6 trillion, while gold remains at $17 trillion.

Other markets saw significant moves, with gold taking a breather amid USD strength following the Federal Open Market Committee’s (FOMC) recent hawkish tone. The AUD remains under pressure, though analysts believe potential support could emerge with further stimulus from China and Australia’s hawkish monetary policy outlook.

ETHBTC Gains Ground

In the shadow of BTC’s breakout, ETHBTC has stabilized, benefiting from overall risk sentiment. However, some caution remains, as the convexity around BTC and expected policy shifts with Trump’s new term could limit how far ETH can push relative to BTC.

Risks on the Horizon

The geopolitical landscape poses additional challenges. Trump’s policy approach and unscripted speeches could introduce volatility, while heightened tensions in the Middle East add further risk. Despite these factors, the VIX index remains relatively subdued, yet an escalation in the Israel-Iran conflict could quickly shift market sentiment.

Upcoming Economic Events to Watch

In the week ahead, key data releases include:

• BoJ Summary of Opinions (Mon): Japan’s BoJ is expected to keep its rate steady, as it did in October.
• UK Jobs Data (Tue): Expected to show a slight rise in unemployment.
• US CPI (Wed): Anticipated increase in headline CPI, closely watched by inflation-sensitive investors.
• Australian Jobs (Thu): With a forecasted 25k job gain, lower than September’s 64.1k.
• Chinese Industrial Production and Retail Sales (Fri): Expected steady or slightly improved, which could affect the AUD.
• US Retail Sales (Fri): September saw a 0.4% increase; this month’s data will reveal consumer confidence heading into the holidays.

As the crypto market responds to these unfolding economic and political shifts, investors remain watchful, prepared for what could be one of the most dynamic years in recent memory for both traditional and digital markets. Stay tuned as we navigate through this volatile period!