Bitcoin’s 30% surge after the US presidential election is a clear manifestation of the “Trump trade,” as market expectations rise that the new administration will create a more favourable regulatory and fiscal environment. Moves like the potential reshaping of the SEC and positioning Bitcoin as a reserve asset are drawing huge institutional investment.
Trump’s “America First” policy stance has also boosted confidence in the US economic outlook, driving up risk appetite across markets. On November 7, the day following the election results, Bitcoin’s spot ETF saw a record net inflow of $1.376 billion—providing a major catalyst for price growth.
Given the Fed’s recent rate cuts, Bitcoin is likely to remain above the $85,000 mark this week, with any profit-taking expected to be moderate.
What are the risks of buying Bitcoin right now?
However, two key risks could limit Bitcoin’s upward trajectory. First, the market’s full digestion of Trump’s proposals will remain uncertain until control of the House and any internal party opposition are clarified. If a divided Congress emerges, or if significant resistance to cryptocurrency adoption persists, it could stall Bitcoin’s bullish momentum.
Second, if Trump delivers on his campaign promises, the US could face larger deficits, skyrocketing inflation, and a potential reduction in immigrant labour. These factors could negatively impact job markets and slow economic growth, ultimately weighing on risk assets like Bitcoin.
- Bitcoin breaks $100k: will it be the Digital Gold we have been hoping for?
- US dollar will be supported by Trump tariff threats, analysts reckon
- Vinanz providing picks and shovels for cryptominers
Should you switch from gold to Bitcoin?
Since Donald Trump’s re-election, gold prices have fallen below $2,600, while Bitcoin has hit a record high. Trump’s support for crypto has boosted interest in digital assets, making them a possible alternative to traditional safe options like gold.
Bitcoin’s value has fluctuated over the years, with the worst dip in 2023, when it dropped by 34.6% compared to the previous year (from £33,482 to £21,887). On the other hand, aside from a 5.5% drop in 2021, gold’s value has increased steadily, making it a more stable investment, according to data from the last five years.
“The stability of gold priced in GBP relative to changes in GBP inflation is insightful,” says Cameron Parry, CEO of TallyMoney, which provides gold-based accounts. “A direct comparison of gold priced in GBP versus GBP priced in gold is particularly enlightening. Since the start of this century, gold has increased on average at a rate of 10.56%p.a. against GBP. In absolute terms, gold has increased from £176.20 per ounce, circa 1,000% uplift in GBP.”
Bitcoin and Ethereum’s record price movements have resulted in trading venue Derive.xyz boards now showing a 20% probability of ETH surpassing $4,000 and a 25% chance of BTC breaching $100,000 by December 27.
Derive data also suggests considerable market movement potential between now and then, with a 68% chance for BTC ranging between a drop of 17.69% ($71,400) to a gain of 21.49% ($105,400), and for ETH, a fluctuation between -19.59% ($2,500) and +24.37% ($3,900).
Despite a drop in 7 day ATM implied volatility for both ETH and BTC by nearly 30% post-US election, we’ve seen a recent uptick – 15% for Ethereum and 5% for Bitcoin – reflecting renewed market volatility expectations.
“By examining Bitcoin’s past trends, I have found that the cryptocurrency is currently in a more developed phase compared to previous periods,” said Rania Gule, a senior market analyst with broker XS.com. “While the recent gains are exciting, market environmental data shows that the current increase in Bitcoin is still below its historical growth following the “halving” event, which supports the idea that Bitcoin may see further price increases in the future.”
Gule said this indicates that Bitcoin is in a renewed cycle that could help push its value to higher levels. Although expectations for the cryptocurrency to reach $100,000 may seem exaggerated to some, the continuous rise in price reflects a strong positive trend, supported by growing interest from large institutions advising investors to increase their cryptocurrency holdings, especially Bitcoin.
