Bitcoin hit a new all-time high of $76,000 following Donald Trump’s election victory, reflecting a bullish market sentiment.
The market anticipates a 0.25% Federal Reserve rate cut, which typically supports risk assets like Bitcoin by increasing liquidity and weakening the dollar.
Traders are closely watching the Federal Reserve’s next moves, particularly any signals from Fed Chair Jerome Powell’s comments. There’s a mixed outlook with concerns about potential hawkish policies dampening market enthusiasm.
Bitcoin (BTC) surged to a new all-time high of $76,000 late Wednesday following Republican Donald Trump’s win at the U.S. elections, ushering in a widely expected bullish era for the crypto sector.
BTC added 6.6% in the past 24 hours, CoinGecko data shows, extending 30-day gains to over 21% and more than doubling in value over the past year. Strength in BTC saw everything from dog-themed tokens to those of decentralized exchanges zooming more than 10% — mirroring a stock and bond market rally that’s quickly being described as the “Trump trade.”
“BTC has now navigated three election cycles since its inception in 2009, each followed by rallies to new highs, with prices never dipping back to pre-election levels,” QCP Capital traders said in a Telegram broadcast late Tuesday. “The dollar surged 1.2% to reach July highs of 105, with yields also climbing as markets anticipate stronger economic growth and increased fiscal spending.”
“We expect this bullish momentum to hold strong as we head into 2025,” QCP added.
But now that Trump has been elected to office, what’s next for the markets in the short term? Traders are quickly turning their eyes to the next round of Federal Reserve rate cuts scheduled for later Thursday. A pivot to lower borrowing costs has historically buoyed bullish sentiment among traders as cheap access to money spurts growth in riskier sectors.
Analysts expect a 0.25% rate cut this week, which has historically benefited assets like BTC by diluting the dollar’s value and pushing investors towards alternative investments. There’s a 97% chance for a 25 bps cut on Polymarket, with 1% for 50 bps and even lower for higher.
“A 25bps rate cut is widely anticipated, with the market pricing in a 96.8% probability of such a move (according to FedWatch),” shared Min Jung, research analyst at Presto Research, in a note to CoinDesk. “However, the rates market has been signaling uncertainty, evidenced by the benchmark 10-year Treasury yield climbing to 4.48%, its highest level over four months.”
“This increase reflects expectations that a Trump election win could lead to higher deficits and inflation. Therefore, attention will be focused on Powell’s press conference for insights, particularly since November does not include a Summary of Economic Projections (SEP) update,” Min added.
Some consider hedging bets if Fed chair Jerome Powell’s speech gives bearish signals.
“A hawkish tilt on Thursday’s FOMC would be an unwelcome development for the market, but an insistence on staying on the current dovish path would also risk a potential yield tantrum as bond buyers go on a buyer’s strike into year-end,” Augustine Fan, dead of Insights at SOFA, told CoinDesk in a Telegram chat.
“Furthermore, with China likely to respond with a more aggressive easing policy in light of the tariff-heavy policies from Trump, there appears to be no end to bond supply and we fear that the move higher in USD FX and yields could be a significant risk-dampener at some point,” Fan added.
As such, there’s also attention on another stimulus package out of China, which tended to influence bitcoin prices despite cryptocurrency trading being illegal in the country. China’s potential easing policies in response to US tariffs could introduce volatility, particularly affecting the dollar’s strength and yield movements.
Meanwhile, some traders don’t foresee additional rate cuts in the Trump administration.
“Despite expectations for a decrease in rate cut probabilities due to Trump’s “friendlier” proposed policies, the market is still pricing in 1.8 cuts this year and 3 more cuts next year,” QCP said in its Wednesday note.