- Donald Trump secured a decisive victory in the US presidential election
- America experienced a red wave, with Republicans taking majorities in Congress and the Senate
- Markets rallied, posting a 2% gain, and the Dow Jones index recorded a record jump of 43.47 points
- Bitcoin has experienced several breakouts, currently consolidating around $76.3K
- Analysts are projecting $100K as a potential target, even before the inauguration
- Ethereum has reached $3K, and Solana now ranks third among cryptocurrencies by market cap.
- Mixed macroeconomic indicators suggest the potential for inflationary pressures to rise.
- This could affect further interest rate cuts, and recession indicators remain
- However, the Fed made its planned 25 basis point rate cut a few days ago
- Donald Trump inherits a range of significant economic issues and political challenges to navigate
Donald Trump decisively won the presidential election and markets overall and the crypto market reacted instantly. Stock markets rose by 2%, and the Dow Jones index recorded a significant jump of 43.47 points. Bitcoin reached all-time highs, climbing to $74K on Election Day and later surpassing $77.2K, currently consolidating around $76.3K.
Let’s take a closer look at how this much-anticipated event has affected the political and economic climate, what the markets are expecting, and what possible developments are likely to follow.
Politics
Let’s start with the key factor—politics—which seems to signal fundamental changes regarding the current and likely future situation. While it may have seemed unthinkable five years ago, politics now plays a significant role in shaping the crypto market, and this influence is expected to increase.
And there is probably the first Bitcoin president in U.S. history because Trump’s statements suggest a greater alignment with crypto compared to his opponents, such as Kamala Harris. However, we are not here to just believe the statements but to research the real movements and their effects, which are yet to be felt by the entire crypto community.
Still, Nayib Bukele, who boldly challenged the IMF and other financial institutions by adopting a Bitcoin standard, was the first to congratulate Donald Trump on his victory.
Also, Michael Saylor, one of the key figures for Bitcoin and crypto, labeled Donald Trump’s victory as the arrival of the first crypto president in U.S. history.
Senator Cynthia Lummis has reinforced her crypto bill to establish a strategic Bitcoin reserve in the U.S., which now stands a better chance of becoming a historic document, not just for America but for the world. This crypto bill envisions the purchase of 200,000 BTC annually for five years, and she predicts that within 12 weeks, other countries will also begin adopting similar Bitcoin reserves.
If this scenario does unfold, the US as the world’s largest economy could indeed provide a very powerful incentive for similar initiatives for other nations around the world, and some have already started preparing for this in advance.
Of course, everyone has started preparing in their own way. Remember how Germany recently sold off all of its Bitcoin reserves for an average of $54K? Your comments are welcome.
Also, there is a chance that Donald Trump may launch several initiatives and investigations into the activities of the previous administration. But don’t be in a hurry, there is no need to overestimate his real possibilities, as the system works a little differently.
Yes, Donald Trump’s victory is not the only victory for the Republicans, as they also take the majority, namely 253 representatives in the House of Representatives and 16 pro-crypto senators in Congress for the next two years. In all likelihood, this does seem to be in line with the sentiment of the majority of Americans if you look at this map, which demonstrates the so-called red wave and has also fundamentally discredited the credibility of social polls.
However, this is still not enough to overcome the filibuster, meaning that the Democrats will need to negotiate and may be able to block several initiatives.
A possible subject of investigation is the Checkpoint 2.0 operation, allegedly directed by Democrats against cryptocurrency and its participants. It is also worth noting that Senate Banking Committee Chair Sherrod Brown of Ohio has lost his senate seat and overall it seems that a trend is emerging where an anti-crypto stance is a threat to political careers and a number of politicians need to think about it to keep the electorate.
Economy
Let’s take a look at the global economy and markets, and the challenges that the new administration will have to deal with.
Let’s start with the good news that in the short term, the economy has reacted positively to the outcome of the election, and while America is in a red tide, stock markets are blooming in green.
The same thing is happening with the entire crypto market, but we will come back to it a little later.
Market stocks rose by 2% and the Dow Jones rating posted a record jump to 43.47, ten-year Treasury yields and the U.S. dollar rose, while gold declined.
Investors are looking for higher real economic growth rather than inflation and the US Fed has also made a planned 25 basis point interest rate cut, but some have questions about further cuts as at the same time inflation expectations are also rising.
The rise in Treasury Inflation-Protected Securities (TIPS) suggests market anticipation of inflationary risks due to Trump’s economic agenda, including tax cuts, that may stimulate growth, but fiscal expansion and tax incentives could drive consumer prices higher, potentially adding volatility to the recovering bond market.
Meanwhile, the delinquency rate on commercial mortgage-backed securities (CMBS) for offices jumped to 9.4% in October, the highest in 11 years, and the delinquency rate on commercial office real estate loans has quintupled in the past two years.
The delinquency growth rate is now comparable to the 2008 financial crisis and promises to surpass the historical high of 10.3% recorded in July 2012. The situation in commercial real estate is turning into a concerning but familiar large-scale crisis, as well as disappointing similar indicators in the automotive industry and in the residential real estate sector.
There are early signs of a potential recession, and it will be up to the new administration under Donald Trump to address the resulting challenges.
Bitcoin
Ok, now let’s move on to what has traditionally countered all of this and what we are all here for.
Bitcoin has reached $76K for the first time in its history, and to reach $100,000 per bitcoin, we only need to add $390B to the capitalization. While this may not seem like a huge amount — especially considering that Tesla added $80B in just one day yesterday — it remains a technical possibility, though not a guarantee.
What’s hard to stop looking at is fire, water, and when a desirable asset draws a god candle, which Bitcoin showed at $7K.
This has allowed Bitcoin to overtake Meta to become the ninth largest asset on this planet, with gold at the top, as well as the top shovel seller of recent years, Nvidia. There is, however, a consistent yet somewhat vague opinion that Bitcoin could eventually surpass this level if its price reaches $700K.
And it may indeed happen someday, as Bitcoin’s monthly returns have been rising rapidly and consistently, with October up 11.2%, November up over 10% already, and it’s only been the first week of the month.
However, Nvidia is still the fastest-growing asset, with +170% versus Bitcoin’s +66%. But that’s no reason to be disheartened, as just the way it has gotten close to gold gives some optimism regarding Bitcoin in this regard. Also, there is another elephant in the room that is not accounted for in this chart and that is MicroStrategy with its unprecedented 308% year-to-date growth rate.
Speaking of crypto ETFs, there’s much to discuss. Investors were actively buying it before the election, but on November 3, some speculators opted to sell a large batch of shares in spot Bitcoin ETFs.
They probably regretted their decision and this could also have affected the record inflows in their attempt to get back in as soon as possible after the election result and new market data.
This could be indicated by the trading volume which was $1B in 20 minutes on the morning of November 7, which is usually the average weekly volume but not the volume of a single day much less 20 minutes, and that’s just BlackRock.
Other Bitcoin ETFs are also showing huge trading volumes approaching record highs, suggesting massive excitement in the market.
Kudos to the treasuries and pension funds that have already bought Bitcoin at $40K, $50K, and even $60K or $70K.
Of course, this does not cancel the cyclicality of the market and does not guarantee that we will not fall into the $60K range and beyond, but still, we can see the optimistic signals at the moment and they may work for growth if we continue to close above $74K soon.
Regarding further targets and estimates of other analysts, MartyParty writes that the pattern of the cup and handle is already being realized before our eyes and puts the mark at $124.5K.
CNBC and Watcher Guru in turn claim $100K even before Donald Trump’s inauguration, which is set to take place on January 20.
There are also a number of forecasts by well-known key industry figures, and they too vary considerably from more to less realistic but are unified in their optimism.
Predictions by 2025:
- Peter Braundt $135K
- Mark Yusko $150K
- Tim Draper $250K
- Roberts Kiyosaki $500K
Predictions by 2026 – 2030:
- Plan B $400K by 2026
- Arthur Hayes $750K by 2026
- Mike Novogratz $500K by 2028
- Tyler Winklevoss $500K by 2030
- Cathie Wood $1M by 2030
- Michael Saylor $13M by 2045
Altcoins
Let’s take a look at what the altcoin data shows. Not long ago, Ethereum was lagging behind the major assets, giving hope that it would be its turn next. Looking at this chart we could assume that it will get a final shakeout at these levels before we see a major reversal, which in general could be said not only for Ethereum but for altcoins in general.
Also, this is indicated by the charts of total altcoin capitalization, which are showing signs of reversal.
And Ethereum is very reminiscent of the Solana picture in 2023, and if it follows it, it will be a very bright run.
But now Ethereum has already started to revive noticeably, rising to $3K.
Speaking of Solana which has given so many reasons to talk about it the last few days. Solana has overtaken Binance to become the third largest cryptocurrency if we don’t take into account stablecoins and Tether in particular.
The picture now looks like this, with Bitcoin capitalization of $1.5T, Ethereum $365.5B, Solana almost $94B, and BNB $91B.
This changes the balance of power a lot, and if Solana overtakes Ethereum, its price could be $1211.
Also, there is probably a Solana ETF on the way and a message from Cry Capital. And they applied for a Solana ETF, not an Ethereum ETF, because their main idea is to analyze the fundamentals and they see that the share of active Solana addresses has grown significantly over the last year.
They also know that they won’t have the same factor that Bitcoin or Ethereum had – the huge Grayscale Bitcoin or Ethereum that they had to sell that torpedoed the Bitcoin ETF in the beginning.
Also, Solana has just surpassed Ferrari in market capitalization, with Solana at $89B and Ferrari at almost $83.5B, and showed its god candle.
Of course, it’s not a guarantee, but it’s not without merit, because as we often point out, you need to evaluate everything holistically and consider what personalities are behind the project, what technologies are being used, and what problems are being solved.
Solana has something to say here with its secure and fast Rust, smart contract capabilities and decentralized applications with more speed and lower fees. Also with 6,500,000 active users and a skyrocketing number of transactions on its network, putting a lot of stress on Base.
Conclusion
Last week provided us with many events of the most fundamental importance, and in all likelihood, this is just the beginning.
We don’t know yet how all these things will play out in the longer term, because Donald Trump leaves a significant degree of uncertainty in so many issues and initiatives.
But there’s no doubt that we’re looking at a time when everything is highly connected and impacts each other.
Keep a cold mind, apply critical thinking, and be aware of all the aspects and signals.
