Bitcoin’s meteoric rise has momentarily stalled as traders digest the implications of President-elect Donald Trump’s pro-cryptocurrency stance. The digital asset surged by approximately 31% following Trump’s November 5 election victory, reaching an all-time high of $89,968 on Tuesday, according to Bloomberg data. As of Wednesday morning in Singapore, it traded at $87,940.
Trump has expressed strong support for cryptocurrencies, promising a favorable regulatory framework, a strategic Bitcoin stockpile, and a vision of positioning the U.S. as the global hub for digital assets. His pivot from being a crypto skeptic to a supporter followed significant financial backing from the crypto industry during the election, which lobbied for policies aligned with their interests.
This newfound optimism sparked a rally, propelling the total market capitalization of digital assets to a historic peak. However, questions remain regarding whether Trump and the Republican-controlled Congress will prioritize cryptocurrency legislation amid more pressing issues, such as China relations and broader U.S. economic concerns. This uncertainty has prompted some caution among investors.
“While further gains can’t be ruled out, a lot of positive news is already priced in,” noted Tony Sycamore, a market analyst at IG Australia Pty.
Among the standout performers in the cryptocurrency space is Dogecoin, the meme-inspired token that has seen explosive growth. With strong backing from Elon Musk, Dogecoin (DOGE) has surged by 100% over the past five days. Musk’s influence on the token has been further amplified by his recent suggestion that he could head a new U.S. Department of Government Efficiency, which has drawn speculation that the department’s initials (D.O.G.E.) could be a nod to the popular cryptocurrency.
Trump formalized Musk’s role on Tuesday, naming him co-head of the department, which is tasked with reducing wasteful government spending. Following the announcement, Dogecoin briefly spiked, reflecting market enthusiasm for the potential ties between Musk, Trump, and the crypto world.
As attention turns to U.S. inflation data, investors are bracing for potential shifts in Federal Reserve policy, particularly regarding interest rate cuts. The expectation that Trump’s trade policies—such as tariffs and tax cuts—could spark inflationary pressures has contributed to a rise in U.S. Treasury yields and the dollar, making riskier assets like stocks and crypto more vulnerable to higher borrowing costs.
The correlation between rising yields and crypto prices has been evident in recent weeks, with stocks dipping on concerns over the impact of inflation. As Noelle Acheson, author of the Crypto Is Macro Now newsletter, pointed out, “While the crypto market’s relatively muted leverage mitigates the risk of a sharp correction, a market breather would be welcome. However, the tailwinds for Bitcoin remain strong.”
Bitcoin briefly surpassed the $90,000 mark on several trading platforms, including Coinbase Global Inc., with many investors betting that the token could hit $100,000. According to data from Deribit, bullish options bets are concentrated on this level. Furthermore, inflows into U.S.-listed Bitcoin exchange-traded funds (ETFs) surpassed $1 billion at the start of the week, signaling strong institutional interest.
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