(Bloomberg) — A rally in Bitcoin has stalled as traders assess the residual market impact of newly elected President Donald Trump’s rhetorical support for crypto.
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Digital assets rose about 30% in the wake of Trump’s Nov. 5 election victory, hitting a record high of $89,968 on Tuesday, based on data compiled by Bloomberg. The token fell to $86,550 at 6:30 a.m. in London on Wednesday.
Trump has promised to create a friendly regulatory framework for crypto, establish a strategic Bitcoin stockpile and make the US the global hub for the industry. Once a crypto skeptic, Trump changed course after digital asset companies spent heavily to further their interests during their election campaigns.
His stance spread optimism about crypto, sending the market’s value to an all-time high. But thorny questions remain about whether Trump and his Republican lawmakers will focus first on bigger issues like China policy and the U.S. economy, putting digital asset legislation down the pecking order.
“While we wouldn’t rule out further gains, a lot of good news is now priced in,” IG Australia Pty market analyst Tony Sycamore wrote in a note.
Dogecoin
One of the strongest players in crypto recently is Dogecoin, a token promoted by billionaire Elon Musk and a favorite of the meme crowd. The Shiba Inu-themed coin, also known as DOGE, has risen about 80% in the past five days.
Before the election, Musk suggested he could head up a Department of Government Efficiency, whose initials are a clear nod to the cryptocurrency. Trump on Tuesday announced the creation of the department to cut wasteful spending, saying Musk would be its co-head. Dogecoin made a brief jump after the statement before following Bitcoin lower.
In global markets, the spotlight is on upcoming US inflation data, which could color views on the Federal Reserve’s options for further rate cuts.
Higher yields
Treasury yields and the dollar are rising, an indication that investors expect inflationary pressure from Trump’s plan to impose trade tariffs and cut taxes. Stocks fell against that backdrop, as relatively higher financing costs pose a potential hurdle for riskier investments, including crypto.
“Relatively muted” leverage in the crypto market “reduces the risk of a sharp correction,” said Noelle Acheson, author of the Crypto Is Macro Now newsletter. “A breather in the market would be welcome, but it is likely to be short-lived. The tailwind is still strong.”
