"Crypto President" Trump presses the bull market start button?

Trump wins the election, BTC hits new highs for two consecutive days, reaching a peak of $76,243.

Written by: Mu Mu

"Make America the crypto capital," Donald Trump once said during his presidential campaign, igniting the enthusiasm of crypto asset players and triggering a "Trump trade" in the crypto asset market. On November 6, this Republican figure finally succeeded in being elected as the 47th President of the United States, sending both the crypto market and the US stock market soaring.

According to Wind data, as of the close of the US stock market on Wednesday, the Dow Jones closed at 43,729.93 points, up 3.57%; the Nasdaq closed at 18,983.47 points, up 2.95%; and the S&P 500 closed at 5,929.04 points, up 2.53%. All three major US stock indices closed at record highs.

According to Coingecko data, Bitcoin (BTC), the top crypto asset by market capitalization, broke through $75,000 on November 6 and climbed to around $76,240 the next day, setting new all-time highs for two consecutive days. The total market capitalization of the crypto asset market also returned to $2.6 trillion, just one step away from its historical high of $3 trillion (November 2021).

The crypto community is optimistic about the market following Trump’s election as president, but some are also calmly observing whether this "crypto president" can fulfill the promises he made to attract crypto voters.

Besides sentiment, another factor closely related to capital inflows is the Federal Reserve's interest rate decision. The market is also watching how the new president will affect the pace and extent of Fed rate cuts. After all, Trump has repeatedly expressed dissatisfaction with current Fed Chairman Jerome Powell in public.

Trump Wins the Election, BTC Sets New All-Time Highs

The long-awaited US presidential election result is finally in, with Trump ultimately winning the election with 277 votes, securing another ticket to the White House.

During the tight race between Trump and Harris, the price of Bitcoin (BTC) showed a positive correlation with Trump's winning probability. In the days leading up to the final voting day, when polls showed Trump trailing Harris by 1%, BTC immediately halted its upward trend and instead fell by 3%. On November 6 (UTC+8), when the results were announced and Trump received more votes, BTC surged strongly, reaching a new all-time high of $75,409, with a 24-hour increase of over 7%.

In addition, BTC options open interest also saw a significant increase before and after the election results, indicating investors' strong expectations for post-election market volatility. According to TradingView data, the Bitcoin Implied Volatility Index (DVOL) on crypto options exchange Deribit rose to an annualized 63.24%, the highest level since late July.

BTC options open interest rises

As of 17:00 on November 7 (UTC+8), among the top 5 crypto assets by market capitalization, aside from BTC and the US dollar stablecoin USDT, ETH (Ethereum), SOL (Solana), and BNB (BNB Chain) also performed impressively. ETH, after three months, climbed back above $2,800, with the highest 24-hour increase exceeding 8%; SOL briefly broke through $190, with a 24-hour increase of 3.8%; BNB hovered around the $600 mark again, with a 24-hour increase of 2.7%.

In addition, the leading project in the Meme coin sector, DOGE (Dogecoin), also broke through $0.203 due to the presence of Trump supporter Elon Musk. The annual high for this coin is $0.220. The Tesla CEO was the most famous KOL for Dogecoin in the last crypto bull market, influencing DOGE’s price several times with his comments. Now, Musk is a staunch Trump supporter, not only publicly endorsing him on various stages but also contributing $75 million to support the Republican Party.

DOGE once surged 14% in a single day the previous week, potentially stimulated by Musk’s statement of doubling down on Trump’s election, claiming he would establish a Department of Government Efficiency. The abbreviation D.O.G.E. coincidentally matches the Dogecoin code DOGE exactly. After attending a Trump rally, Musk also displayed a DOGE avatar in his tweet, causing Dogecoin to rise from $0.14 to $0.16 that day.

On November 6, Musk posted several tweets supporting Trump. When Trump’s votes surpassed Harris, Musk tweeted "Game, set and match," implying "the game is over, the victory is decided," and DOGE soared again, with a maximum increase of over 20%.

How Long Can the "Crypto President’s" Market Influence Last?

There is no doubt that Trump’s election has injected a shot of adrenaline into the crypto asset market, which had been volatile for most of the year. A major reason is that this president repeatedly wooed US crypto enthusiasts with "pro-crypto policies" during his campaign, promising a more liberal stance toward the crypto industry than Harris and the Democratic Party.

Trump’s "crypto promises" include not allowing the creation of a government-led digital dollar but supporting the US dollar stablecoin bill; replacing SEC Chairman Gary Gensler, who has repeatedly cracked down on crypto financial companies, to reverse the regulatory hostility toward the crypto industry; and protecting Americans’ rights to self-custody their crypto assets, among others.

The most exciting of these promises for the community is the proposal to pass the Bitcoin Strategic Reserve Act, so that the US government would no longer sell but instead hold Bitcoin for the long term. He also stated he would establish a "Bitcoin and Crypto Presidential Advisory Committee."

Given Trump’s friendly attitude toward the crypto industry, Standard Chartered analyst Geoff Kendric once predicted that after Trump’s victory, BTC could reach $125,000.

PlanB, the creator of the Bitcoin Stock-to-Flow (S2F) model, is even bolder, providing a timeline for the upside. He predicts that if Trump is elected president in November, BTC will reach $100,000; with BTC ETF inflows, BTC will soar to $150,000 in December; and by March 2025, the price will break through $500,000.

Now that Trump’s presidency is confirmed, whether these promises can be fulfilled is part of the basis for many market observers to judge the future bull or bear market.

Several analysts believe that the election-driven Bitcoin rally is more of a temporary phenomenon. Analyst The Giver pointed out, based on the limited amount of market capital, that BTC price surges will be limited to the fourth quarter of 2024 and are unlikely to continue into the next year.

Other analysts remind market participants that even if Trump fulfills his crypto promises, they will have to be gradually implemented over his four-year term and face multiple constraints. For example, the president appoints the cabinet and needs the Senate’s approval for his key aides; reforms or amendments to economic policies must be passed by Congress. "Turning words into action will be a long process, but overall, a Trump-led US government is likely to reduce regulatory resistance to the development of the crypto and tech industries in the US."

If the US presidential election result is seen as a turning point for the crypto market, the longer-term market direction will be influenced by the Federal Reserve’s interest rate decisions, with each monthly result causing financial market fluctuations.

This Federal Reserve interest rate meeting will be held in the early morning of November 8 (UTC+8). The market predicts that a Fed rate cut in November is a foregone conclusion. According to CME "FedWatch," the probability of a 25 basis point cut in the federal funds rate in November is 99.7%, and the probability of maintaining the current rate is 0%. However, whether the Fed’s future rate decisions will be affected by the new president’s inauguration has become one of the market’s concerns.

It is expected that Fed Chairman Jerome Powell will answer questions about how the election affects the Fed at the press conference following this week’s FOMC meeting.

This is also a topic of concern for financial market participants, not only because Powell was criticized by Trump during his previous presidency and this year’s campaign, but also because Trump believes the president should "have a say" in the Fed’s rate decisions.

However, US law still provides procedural protection for the Fed’s independent decision-making. Trump also stated in October this year that he does not believe he should be able to order the Fed to do anything.

The only way Trump can legally influence the Fed is by appointing key personnel. Even if he is dissatisfied with Powell, he cannot remove the current chairman until at least 2028. Powell’s term as Fed chairman ends in May 2026, and his position on the Fed Board of Governors will be vacant in January 2028.

In terms of both time and scope, Trump’s direct influence on the Fed’s rate decisions is still very limited, and rate cuts are likely to continue into next year as part of the Fed’s actions.

Goldman Sachs Chief Economist Jan Hatzius believes the Fed will deliver on its previous hints of two rate cuts by the end of the year, expecting this to "continue into the first half of 2025." He also noted in a report, "We expect the Fed to cut rates four times in the first half of 2025, ultimately lowering the rate to 3.25%-3.5%."

For the crypto asset market, Fed rate cuts are a "double-edged sword." On one hand, such quantitative easing policies will to some extent bring more capital from savings and bond markets into risk markets; on the other hand, the inflation risk triggered by rate cuts is also a sign of economic recession, which is ultimately unfavorable for financial markets.

In the short term, the conclusion of the US presidential election and the announcement of the Fed’s November rate decision will make this an important week in crypto history. Under the double buff, the crypto market will complete the 2024 "Bitcoin halving year." According to the market’s historical pattern, the year after the halving will usher in a new bull market.