After the shocking announcement of Donald Trump as the next president of the US on November 6, 2024, the crypto market experienced a surge of excitement. Bitcoin soared to new all-time highs (ATH), surpassing $91,000 on November 14, 2024, and inching closer to the long-awaited $100,000 mark. This significant milestone thrilled crypto enthusiasts and traders alike.
The Trump victory also had a positive impact on major stock indexes, with the Dow Jones, S&P 500, and Nasdaq all reaching record highs. As a result, crypto traders saw substantial gains in their wallets, while Wall Street employees received their largest bonuses in two years. However, the question remains: is the market rally triggered by Trump’s win a temporary phenomenon, or will it persist throughout his second term in office?
The surge in the market following Trump’s victory can be attributed to investors’ expectations of favorable policies under the new administration. One such policy is the proposed reduction of corporate tax rates from 21% to 15%. This move would enable businesses to retain more earnings, leading to increased reinvestment, job creation, higher dividends for investors, and share buybacks.
Furthermore, the crypto bull run is fueled by President-elect Trump’s pledges, including the establishment of a strategic crypto reserve. This initiative would involve the US government, which holds the largest bitcoin reserves globally, acquiring additional cryptocurrencies. By increasing its bitcoin holdings valued at over $2 billion, the government would create scarcity in the market, driving up bitcoin prices and subsequently boosting the entire crypto market.
Additionally, Trump’s promise to dismiss Gary Gensler, the Chairperson of the US Securities and Exchange Commission (SEC), has also contributed to the market rally. Gensler, known for his stringent regulations on crypto companies and protocols, has faced legal challenges from 18 US states and the Defi Education Fund. While the President does not have the authority to directly remove the SEC Chairperson, his stance on Gensler has garnered attention from the crypto community.
Despite the current optimism in the market, there are concerns about the sustainability of the Trump-led rally. Billionaire investor and Trump supporter, Nelson Peltz, has warned that the euphoria surrounding the stock market rally may be short-lived. This sentiment aligns with projections from Goldman Sachs, indicating that double-digit annual returns in the stock market may not be sustainable over the next decade.
Furthermore, the dominance of the ten largest tech corporations, including Apple and Microsoft, in the market raises concerns about a potential correction. These companies hold unprecedented valuations reminiscent of the dot-com bubble in the early 2000s, signaling a potential market adjustment in the future.
Moreover, Trump’s proposed tariffs on imports could lead to a resurgence of inflation in the US, further complicating the market outlook. The uncertain impact of these policies raises questions about the longevity of the current market rally under the new administration.
In the realm of cryptocurrencies, the sustainability of the Trump-led bull run hinges on the President’s ability to fulfill his promises. While there is optimism within the crypto community regarding Trump’s pro-crypto stance, there are uncertainties surrounding the implementation of his proposed initiatives.
Coinbase CEO Brian Armstrong remains optimistic about the future of the crypto industry under Trump’s leadership, referring to it as a potential opportunity for growth and regulatory clarity. Armstrong highlights the importance of a “pro-crypto congress” in providing guidance on key industry issues previously clouded by regulatory ambiguity.
The recent surge in the crypto market following Trump’s election has sparked debate about its correlation with the political landscape. Some experts, such as Adam Parker, Founder of Trivariate Research, suggest that investor relief from the conclusion of the elections and reduced political tensions may have contributed to the market rally.
While the duration of the crypto bull run remains uncertain, prudent investment strategies, such as investing disposable income and following expert advice, can help navigate the volatile market conditions. As the market continues to react to Trump’s presidency, investors are advised to stay informed and exercise caution in their financial decisions.
