Today (November 8, Singapore time), the Federal Reserve has lowered interest rates by 25 basis points as expected. Trump's announcement of his candidacy, being a pro-cryptocurrency player, has brought significant positive news to the cryptocurrency market. With BTC encountering a halving cycle in November, the favorable election news, and the interest rate cut, it is ushering in a bull market!
Trump's Election: A New Hope for the Cryptocurrency Market
In terms of economic policy, Trump advocates for economic freedom and reduced government intervention, showing a positive attitude towards cryptocurrencies and attempting to make the U.S. a global cryptocurrency hub. His stance has attracted a segment of voters who are positive about cryptocurrencies, earning him the title of the first "crypto president."
He plans to include Bitcoin in the U.S. strategic reserve assets and promote more open cryptocurrency market policies. Additionally, Trump has verbally promised to fire SEC Chairman Gary Gensler, a move that would further relax regulations on Bitcoin and other cryptocurrencies.
After Trump's election, BTC indeed surged to $76,000, reaching a historic high of $76,900. It increased by over 10% within two days and is currently valued at $75,778. For detailed analysis, you can download the AICoin app to view it at https://www.aicoin.com/download
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JPMorgan also acknowledged in its latest report that the largest cryptocurrency by market capitalization, BTC, will continue to benefit from the Republican victory in the U.S. presidential election, stating, "We continue to see Trump's trades generating a response similar to that of 2016 over the next eight weeks."
Federal Reserve Cuts Rates by 25 Basis Points
The Federal Reserve's rate cut policy stimulates the economy by lowering borrowing costs and increasing market liquidity, which is generally positive for risk assets, including Bitcoin. With the implementation of the rate cut, the market expects an increase in cryptocurrency investments, as investors often seek higher return opportunities in a low-interest-rate environment.
The rate cut leads to a depreciation of the dollar, which typically drives investors towards alternative assets like Bitcoin, as they are seen as hedges against inflation.
The federal funds rate target range has been lowered by 25 basis points to between 4.5% and 4.75%. This is a response to the slowing economic growth, aimed at stimulating economic activity by reducing borrowing costs. Rate cuts usually increase market liquidity and lower the cost of capital, benefiting the risk asset market.
BTC Halving Cycle: Scarcity and Price Potential
Bitcoin halving refers to the event where the block reward is reduced by 50% after every 210,000 blocks mined (approximately every four years). The halving event reduces the supply of new Bitcoins, thereby increasing its scarcity and price potential. The halving cycle is generally viewed as a key bullish factor for the Bitcoin market, as it typically triggers price increases afterward.
According to historical data, the first halving occurred on November 28, 2012, when the block reward dropped from 50 BTC to 25 BTC. A year after the halving, Bitcoin's price reached an all-time high, increasing by nearly ninety times; the second halving was on July 9, 2016, when the block reward dropped from 25 BTC to 12.5 BTC, and a year later, the price again reached an all-time high, increasing by over twenty times; the third halving occurred on May 11, 2020, when the block reward dropped from 12.5 BTC to 6.25 BTC. Each halving event has seen Bitcoin's price rapidly increase within 6 to 12 months, reaching new historical highs.
The latest historical halving event occurred on April 19 of this year, when the block reward dropped from 6.25 BTC to 3.125 BTC. According to historical trends, the recent months align with BTC's bull market cycle following the halving event.
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Conclusion
In the context of increasing global economic uncertainty, investors are more optimistic about Bitcoin's potential as a safe-haven asset. The market generally believes that the triple benefits will collectively drive Bitcoin into a new bull market. These three favorable factors not only bring new opportunities to the Bitcoin market but also provide investors with a chance to reassess the value of cryptocurrencies.
As the global economic environment changes, Bitcoin's market performance will continue to attract the world's attention. While the future remains full of uncertainties, it is certain that Bitcoin is on the eve of a transformation.
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