Bitcoin’s price has seen a significant surge in the past month, driven by the so-called “Trump trade”. Analysts expect the token to continue surging towards a six-digit figure.
Bitcoin rose 6.7% over the weekend and topped $81,000 (€76,000) for the first time in history during the Asian session on Monday amid optimism that a Trump Administration will benefit cryptocurrencies. Other cryptocurrencies also experienced a broad-based rally, with Ethereum up 8% and Cardano soaring more than 30%.
Bitcoin investors have been accumulating Bitcoin-related assets, expecting that US cryptocurrency regulations will be more favourable under a Trump administration than they are under President Joe Biden. Bitcoin surged before and after Trump’s victory in the US election, with its price soaring 35% in one month and 94% year-to-date, largely attributed to the so-called “Trump trade”.
A six-digit figure may not be far off
The former US President has been notably pro-cryptocurrency, pledging at the Bitcoin 2024 conference to make the United States “the crypto capital of the planet” and position Bitcoin as a global superpower. Trump also vowed to dismiss Securities and Exchange Commission (SEC) Chair Gary Gensler, promising to “appoint an SEC chair who will build the future, not block the future” if re-elected.
Bitcoin has been in a range-bound movement between low-$50,000 (€47,000) to mid-$70,000 (€65,000) since March, despite favourable events including the approval of a spot Bitcoin ETF by the US Securities and Exchange Commission (SEC) in February and the Bitcoin Halving event in April. Its price soared to a new high of above $75,000 (€70,000) on election day last week, suggesting inflows picking up and leading to the breaking-through momentum.
Josh Gilbert, a market analyst at eToro, expects the momentum to continue and push its price toward a six-digit number “in a few months”, adding that inflows to bitcoin ETFs surged at a record daily pace last week. He also mentioned that this kind of surge may spark retail clients’ profit-chasing actions, as seen in the last bullish wave in 2021.
Risks Ahead
While some analysts predict that Bitcoin could hit $100,000 (€92,000), others caution that Trump’s tariff policies could reignite inflationary pressures, potentially weighing on cryptocurrency markets. Trump recently stated: “The most beautiful word in the dictionary is tariff”, during an event at the Economic Club of Chicago.
Cryptocurrencies are seen as an alternative asset class, benefiting from an easing monetary environment with adequate liquidity, particularly during a rate-cutting cycle of central banks. Simply put, crypto assets tend to go up when interest rates go down; conversely, rising interest rates usually pressure these digital tokens. In a scenario where Trump imposes his pledged tariffs on other countries, we might see inflation re-elevate in the US and encourage the Federal Reserve to raise its interest rates again.
In the near term, the picture of whether the Republicans will control both the House and Senate can also impact the crypto market’s movements.
“The likely inflationary impact of the Republican promises may hit every asset class, including gold and cryptos. There is a dawning that this Red tide may mean higher interest rates for longer,” Michael McCarthy, the market strategist and chief commercial officer at Moomoo, said.
