Bitcoin reached a historic peak of $81,000 (€76,000) in Asian trading this week, spurred by what analysts are calling the "Trump trade." With a monthly price surge of 35% and a year-to-date increase of 94%, this rally reflects investor expectations that a Trump administration would adopt more crypto-friendly policies compared to President Biden’s tenure. Trump's pledge to make the U.S. “the crypto capital of the planet” and to replace SEC Chair Gary Gensler with a pro-crypto appointee has boosted optimism among Bitcoin investors.
In addition to political factors, macroeconomic conditions have added momentum to Bitcoin’s climb. With traditional assets under pressure due to inflation and higher interest rates, many investors are turning to Bitcoin as a hedge, benefiting from the current liquidity in the market. A looming six-digit price target has now become more plausible according to market analysts, with some predicting Bitcoin could reach $100,000 (€92,000) within the coming months.
The Trump Administration’s Influence on Crypto
Donald Trump’s supportive statements for cryptocurrencies at the Bitcoin 2024 Conference, where he vowed to establish the U.S. as the "crypto capital of the planet," have energized investors. His plans to reform the SEC by replacing Gary Gensler with a pro-crypto chair could reduce regulatory roadblocks, paving the way for faster crypto adoption. According to market analyst Josh Gilbert at eToro, recent record inflows into Bitcoin ETFs suggest a wave of retail interest that could potentially drive Bitcoin into six-figure territory soon.
Potential Risks for Bitcoin’s Rally
Despite the optimistic outlook, analysts caution that Trump’s policies might still pose certain risks for Bitcoin’s trajectory. For instance, Trump’s preference for tariffs could reignite inflation. This might, in turn, compel the Federal Reserve to increase interest rates, which could weigh on crypto markets. Michael McCarthy, market strategist and chief commercial officer at Moomoo, notes that the inflationary potential of Trump’s policies could impact not just cryptocurrency but also gold and other assets, given the possible impact on U.S. inflation rates.
Current Market Landscape: Bitcoin as a Hedge
Bitcoin’s resilience also comes from broader economic factors. Cryptocurrency often performs well in low-interest rate environments, as it offers an alternative asset class when liquidity is high. For now, investors are confident that inflation concerns and policy developments will continue to support the rally. Analysts are closely watching the upcoming political climate, especially Republican control of the House and Senate, which could significantly impact crypto regulation.
Source: Euronews
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