Trump victory sets crypto alight
Election result fuels digital assets rally
Crypto markets went on a tear in the wake of Trump’s election victory last week with gains across. The gains continued into this week with Bitcoin hitting an all-time high this morning and the $82,000 mark.
Cardano was the outstanding performer gaining 80% over the last seven days, although the coin remains far below its peaks of 2021. There was also a strong performance among meme coins DOGE and WIF, while Tether was trading at an 8bps premium to the US dollar.
Yet more uplift for Bitcoin is distinctly possible over the weeks ahead. However, the transition period between now and Trump’s inauguration in January may also lead to volatility or profit-taking by some investors.
In FX the dollar has also remained strong after the election result but markets this week will be awaiting key data releases in the US including US core inflation on Wednesday and retail sales figures on Friday, which could both prove significant for interest rate expectations.
Nations brace for a changing world order
The Trump victory also dominates the geopolitical mood, notably in Ukraine where Trump has promised to help broker a rapid end to the conflict. While widely seen as unequivocally dovish in his attitude to Putin’s Russia, we are not so sure. As Russia and Ukraine look to secure any advantage that might lead to a more favourable deal, it is conceivable that Trump might even loosen controls on how Ukraine uses US weapons in the war, to increase pressure for a resolution.
Trump’s victory also poses some distinct challenges for western European nations. UK Prime Minister Keir Starmer moved swiftly to congratulate the president-elect. Meanwhile his Foreign Secretary David Lammy sought to defuse a row over some of his past comments regarding Trump.
In Germany, Olaf Scholz’s government is reeling after the sacking of its finance minister, shattering the fragile three-way coalition of Scholz’s Social Democrats, the Greens and his Finance Minister’s Free Democrats.
A vote of confidence in the Scholz government has been scheduled for January, but pressure is mounting on the German Chancellor to agree to a vote before Christmas.
As the largest economy and exporter in Europe, a swifter resolution of the uncertainty could be welcome as Germany will be key to how Europe positions itself towards the Trump administration including both its Ukraine policy and the threat of tariffs.
Trump tariffs will also be exercising minds in China where the government is bracing itself for a potential trade war and simultaneously trying to revive its faltering domestic economy with a $1.4 trillion stimulus package. However, the package, announced on Friday, failed to make a significant impact on market sentiment.
For good or ill and from Bitcoin to Beijing, it looks like Trump will be the biggest headline maker for some time to come.
Brought to you by the BCB Trading Team
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