Trump wins the election, BTC hits a new high for two consecutive days, peaking at $76,243.
Written by: Mu Mu
"Make America the crypto capital," Donald Trump’s statement during his presidential campaign ignited the enthusiasm of crypto asset players, leading to a "Trump trade" in the crypto asset market. On November 6, this Republican figure successfully became the 47th President of the United States, causing both the crypto market and U.S. stocks to soar.
According to Wind data, as of the close of U.S. stocks on Wednesday, the Dow Jones Industrial Average was at 43,729.93 points, up 3.57%; the Nasdaq was at 18,983.47 points, up 2.95%; and the S&P 500 index was at 5,929.04 points, up 2.53%. All three major U.S. stock indices closed at historic highs.
Coingecko data shows that Bitcoin (BTC), the top crypto asset by market capitalization, broke through $75,000 on November 6 and then reached around $76,240 the next day, setting a new historical high for two consecutive days. The total market capitalization of the crypto asset market also returned to $2.6 trillion, just a step away from the historical high of $3 trillion (November 2021).
The crypto community is optimistic about the market following Trump’s election, but some are calmly observing whether this "crypto president" can fulfill the promises he made to attract crypto voters.
In addition to sentiment, the Federal Reserve's interest rate decisions are closely related to the influx of capital, and the market is also watching how this new president will influence the pace and extent of the Fed's interest rate cuts. After all, Trump has repeatedly expressed dissatisfaction with the current Fed Chair, Jerome Powell, in public.
Trump's victory leads BTC to set new historical highs
The long-awaited U.S. presidential election results have finally arrived, with Trump winning the election with 277 electoral votes, securing his ticket back to the White House.
In 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 indicated that Trump was trailing Harris by 1%, BTC immediately halted its upward trend and instead fell by 3%. On November 6, when the results were announced and Trump gained more votes, BTC surged strongly, reaching a historical high of $75,409, with a 24-hour increase of over 7%.
Additionally, the open interest in BTC options saw a significant rise before and after the election results, indicating strong expectations from investors for market volatility following the U.S. election. According to TradingView data, the implied volatility index (DVOL) for Bitcoin on the crypto options exchange Deribit rose to an annualized 63.24%, the highest level since the end of July.
BTC options open interest rises
As of 5 PM on November 7, among the top 5 crypto assets by market capitalization, besides BTC and the stablecoin USDT, the performance of ETH (Ethereum), SOL (Solana), and BNB (BNB Chain) was also quite impressive. ETH re-entered the $2,800 range after three months, with a 24-hour increase of over 8%; SOL briefly surpassed $190, with a 24-hour increase of 3.8%; and BNB hovered around the $600 mark, with a 24-hour increase of 2.7%.
Moreover, the leading meme coin DOGE (Dogecoin) also briefly broke through $0.203, thanks to the presence of Trump's supporter Elon Musk. The annual high for this coin was $0.220. The CEO of Tesla was the most well-known KOL for Dogecoin during the last crypto bull market, influencing DOGE's price multiple times with his statements. Now, Musk is a "die-hard fan" of Trump, actively supporting him on various platforms and even contributing $75 million to the Republican Party.
DOGE had surged 14% on a certain day the previous week, potentially stimulated by Musk's statement to support Trump’s election, declaring the establishment of a Department of Government Efficiency. The acronym for this department, D.O.G.E., coincidentally matches the letters of Dogecoin's code, DOGE. After attending a Trump rally, Musk tweeted with a DOGE avatar, causing the coin to rise from $0.14 to $0.16 on that day.
On November 6, Musk tweeted several times in support of Trump. When Trump's votes led Harris's, Musk tweeted "Game, set and match," implying "the game is over, the outcome is decided," leading to another surge in DOGE, with a maximum increase of over 20%.
How long can the "crypto president's" influence last?
Undoubtedly, Trump's election has injected a dose of excitement into the crypto asset market, which has been volatile for much of the past year. A significant reason for this is that the president has repeatedly courted American crypto enthusiasts' votes with "policy-friendly" rhetoric, indicating a more liberal stance towards the crypto industry compared to the Democratic Party represented by Harris.
Trump's "crypto promises" include not allowing the creation of a government-led digital dollar but supporting stablecoin legislation; replacing SEC Chair Gary Gensler, who has repeatedly cracked down on crypto financial companies, to reverse the regulatory hostility towards the crypto industry; and protecting American citizens' rights to self-custody of crypto assets, among others.
The most uplifting promise for the community is the proposal to implement a Bitcoin Strategic Reserve Act, which would have the U.S. government hold Bitcoin long-term instead of selling it, and to establish a "Bitcoin and Crypto Presidential Advisory Council."
Given Trump's friendly attitude towards the crypto industry, Standard Chartered analyst Geoff Kendric has predicted that BTC could reach $125,000 after Trump's victory.
PlanB, the creator of the Bitcoin Stock-to-Flow (S2F) model, is even bolder, providing a timeline for his predictions. He forecasts that if Trump is elected in November, BTC will reach $100,000; with the influx of BTC ETF funds, 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' judgments on future bull and bear trends.
Several analysts believe that the Bitcoin rise driven by the election is more of a temporary phenomenon. Analyst The Giver points out that the price surge of BTC is limited to the constrained market capacity in Q4 2024 and is unlikely to persist into the next year.
Other analysts remind market participants that even if Trump fulfills his crypto promises, they will need to be gradually implemented over his four-year term, and there are multiple restrictions, such as the need for Senate approval for cabinet appointments and assistance in governance; reforms or amendments to economic policy must also be completed through congressional legislation. "Turning words into action is a long process, but overall, a Trump-led U.S. government is likely to reduce regulatory obstacles for the crypto industry, including the tech sector, in the U.S."
If the outcome of the U.S. presidential election is seen as a turning point for the crypto market, then the longer-term market direction will be influenced by the Federal Reserve's interest rate decisions, which bring volatility to the financial markets every month.
The upcoming Federal Reserve meeting will be held at midnight on November 8, Beijing time, and the market predicts that a rate cut in November is a foregone conclusion. According to CME's "FedWatch," the probability of a 25 basis point cut in the federal funds rate in November is 99.7%, while the probability of maintaining the current rate is 0%. However, whether the Fed's interest rate decisions will be influenced by the new president's inauguration has become one of the market's focal points.
Outsiders predict that Fed Chair Powell will address how the election affects the Fed during the press conference following this week's Federal Open Market Committee meeting.
This is also a topic of concern for financial market participants, not only because Powell has faced criticism from Trump during his previous presidential term and this year's campaign but also because Trump believes that the president should have a say in the Fed's interest rate decisions.
However, U.S. law still provides procedural protections for the Fed's independent decision-making. Trump also stated in October that he does not believe he should be able to command the Fed to do anything.
The only legal way Trump can influence the Fed is through appointing key personnel. Even if he is dissatisfied with Powell, he cannot remove the current chair until at least 2028. Powell's term as Fed Chair will end in May 2026, and his position on the Fed Board will be vacant in January 2028.
In terms of both time and space, Trump's direct influence on the Fed's interest rate decisions remains quite limited, and rate cuts are likely to continue as actions by the Fed into next year.
Goldman Sachs Chief Economist Jan Hatzius believes that the Fed will fulfill its earlier indication of two rate cuts by the end of the year, predicting that this situation "will 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 bringing the rate down 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 bring more funds from storage and bond markets into risk markets; on the other hand, the inflation risks triggered by rate cuts are also a sign of economic recession, which is ultimately detrimental to the financial market.
In the short term, the conclusion of the U.S. presidential election and the Federal Reserve's November interest rate decision will be significant events impacting crypto history. The crypto market will navigate through this dual boost as it approaches the "Bitcoin halving" in 2024. According to historical patterns in this market, the year following a halving typically welcomes a new bull market.
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