Bitcoin hits all-time high of $77,000 after Trump victory and rate cuts
Halogen Capital
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What’s next for the markets and crypto?
Market Movements
Global Macro Market Observations
Wall Street just got a “Trump bump”.
Following Donald Trump’s victory last Wednesday, the S&P 500 enjoyed its best week of 2024, surpassing the 6,000 mark briefly as investors embraced the potential for business-friendly policies that will keep fueling Corporate America.
Over $2 trillion poured into equities in just five days, and Wednesday alone saw $20 billion in new fund inflows, with small-cap stocks jumping nearly 9% and banks joining the rally.
The Federal Reserve added fuel to the momentum with a 25 basis point rate cut, lowering borrowing costs to a range of 4.50% — 4.75%. In China, the government offered a $1.4 trillion lifeline to help indebted local governments, though it held off on broader stimulus amid potential trade tensions as Trump assumes office next year.
Tesla also shone, closing out the week with an 8.2% surge on Friday and a market value topping $1 trillion. The electric vehicle maker’s shares have now gained 29% this year, with investors seeing Trump’s win as a potential positive for Elon Musk’s company.
Malaysia Market Observations
Trump’s “America First” approach has left global markets in a stir, especially in Asia. His election victory brings potential new tariffs that could hit China with a hefty 60% on imports and up to 20% for other nations.
Malaysia’s ringgit, the only Asian currency to rise against the dollar this year, might feel the pinch as Trump’s policies unfold. The ringgit wrapped up Thursday relatively steady at 4.4043 against the dollar, but the future looks anything but certain.
How tariffs could affect Asia?
Trump’s proposed tariffs on Chinese goods could send ripples through the region. US allies like Japan, South Korea, and the Philippines — deeply connected to trade with China, may brace for fallout. Countries with strong Chinese investments may face similar trade restrictions, increasing pressure on economies throughout the region.
Malaysia’s position — risk and opportunities?
Malaysia, a key exporter of electronics and components to the US, could see impacts if tariffs on Chinese goods hit products with Chinese parts. This could dampen US demand for Malaysian exports. Yet, with companies eager to diversify away from China, Malaysia could emerge as an attractive alternative for investment and sourcing.
Crypto Market Observations
Trump’s win is seen to be fueling a fresh wave of momentum in the crypto markets, with some big moves across the board.
Here’s a look at what happened:
Demand for Bitcoin exchange-traded funds (ETFs) is hitting record levels. The iShares Bitcoin Trust (IBIT) just overtook iShares Gold Trust (IAU) in total assets, reaching $34.3 billion after a huge $1.1 billion inflow on Thursday.
Crypto stocks like Coinbase are riding the wave too, with shares up 31.1% on November 6, bringing its gains to 62% for the year. Trump’s pro-Bitcoin stance, along with his promise to create a national Bitcoin reserve, could be a game-changer, potentially opening more doors for the crypto industry.
What We Are Monitoring For The Week Ahead
Looking Ahead: Our Insights
Market price action on election day can be summed up in one image:
Perhaps there was on the ground feedback, but even before concrete results were forthcoming, Trump’s odds on betting markets started climbing significantly. While the conventional wisdom given the polling information was to sit on the sidelines for more definitive information, ‘left curve’ risk seekers sought to take early bets when the odds were more favourable, and ‘right curve’ traders played the meta game by trading alongside them.
Financial markets reacted accordingly, with all the Trump trades gaining momentum early on. Crypto naturally was the highest beta play on the day, with Bitcoin making new all-time-highs before any battleground state was called. Solana, which we’ve always seen as a higher beta play than Bitcoin on a Trump win, gained 12% to Bitcoin’s 7%.
Since then, price action in risk assets has remained bullish, with new all time highs in US equity indices and cryptocurrencies. Though yields and the Dollar had initially spiked following Trump’s victory, those have since retraced substantially, with the 10y yield backing away from 4.48 to close the week at 4.30. This was despite a relatively neutral FOMC press conference which, while confident on the path of inflation and being able to deal with higher bond yields, was also willing to adjust the pace of rate cuts as necessary. Markets have since adjusted its expectations to only 3 further cuts by the Fed till end 2025, though that hasn’t dampened sentiment at all.
Price action seems to lean towards strong outperformance of US assets, and associated trades that would gain from Trump’s planned policy measures. Sentiment there remains firmly risk on, and besides an extremely hot inflation print (CPI on Wednesday) or further escalations in geopolitics, this is shaping up to be a bumper year for US risk assets. We could see further upside acceleration into year end from here, as re-leveraging effects and performance chasing takes over in anticipation of a Santa rally.
Unsurprisingly, crypto traders are over the moon to have a President-Elect in Donald Trump that’s supportive of the industry. Since the election, it’s been up-only in crypto majors. While Bitcoin has been impressive with its new all time highs, ETH and SOL played catch up in a major way. ETH in particular has been impressive, with the anticipation of deregulation helping the beleaguered token outperform Bitcoin in the last 3 days (ETH/BTC up 11% since Thursday).
The crypto market is euphoric, as measured by various gauges such as CFGI.io, but it still seems to be in the early innings. Though the danger of a blow off top exists, prices have yet to make the kind of movements that would signal such an event, and momentum looks to be solid for now. One indicator of such is the pickup in ETF inflows vs. indications of retail participation. Thursday saw record inflows of $1.373 billion into Bitcoin ETFs (though Friday’s flows were minor in comparison). However, Google Trends shows that searches for Bitcoin are still off from the March 24 peak, in the wake of the spot ETF launches. Flows have likely been more institutional in nature (and not all of it due to cash/carry basis trades).
The past three days of price action seem indicative of a resurgence of interest in ETH, perhaps as traders anticipate the more friendly regulatory environment as being a boon to the ecosystem. Trading volumes in ETH options have also exploded relative to BTC options. Spot Ether ETFs have also seen outsized inflows since the election was called, according to Farside Investors. Should these flows pick up, we could be seeing further outsized moves in ETH prices as the market is generally less liquid there.
Price breakouts have been ubiquitous across crypto majors, and at some point there are likely to be pullbacks. For the next week however, it’s reasonable to expect that dips will be shallow and short lived. Bitcoin has so far rejected attempts to retrace decisively below the previous all time high at $73,700, though it did serve as a control point on the day. All else remaining equal, dips back towards that area should be bought, and allocations increased further in the $69,000- $70,000 region.
Thank you for reading and we’ll see you next week!
Team Halogen
Disclaimer: The information, analysis, and viewpoints presented here are intended solely for general informational purposes and should not be construed as personalised advice or recommendations for any specific individual or entity. For personalised investment decisions, individual investors are advised to consult their licensed financial professional advisor. The opinions expressed by the Manager are based on certain assumptions or prevailing market conditions, and they are subject to change without prior notice. This material is being distributed for informational purposes only and should not be regarded as investment advice or an endorsement of any particular security, strategy, or investment product. While the information provided herein may include data or opinions from sources believed to be reliable, its accuracy and completeness are not guaranteed. Reproduction of any part of this material in any form or reference to it in other publications is strictly prohibited without the express written permission from Halogen Capital Sdn Bhd. Halogen Capital Sdn Bhd and its employees assume no liability regarding the use of this material or its contents.