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Bitcoin hit a new all-time high of $76,000 following Donald Trump’s election victory, reflecting bullish market sentiment.
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The market expects a 0.25% interest rate cut from the Federal Reserve, which typically supports risky assets like Bitcoin by increasing liquidity and weakening the dollar.
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Traders are closely watching the Federal Reserve’s next moves, especially the signals from Fed Chairman Jerome Powell’s comments. The outlook is mixed and there are concerns that aggressive policies may dampen market enthusiasm.
Bitcoin {{BTC}} rose to a new all-time high of $76,000 on Wednesday following Republican Donald Trump’s victory in the US elections, ushering in a widely expected bullish era for the crypto sector.
BTC added 6.6% in the past 24 hours, CoinGecko data shows, extending its 30-day gain to more than 21% and more than doubling its value over the past year. BTC’s strength caused everything from dog-themed tokens to those of decentralized exchanges to zoom by more than 10% – mirroring a rally in the stock and bond markets that is quickly being dubbed as the ‘Trump trade’ .
“BTC has now weathered three election cycles since its inception in 2009, each followed by rallies to new highs, with prices never falling back to pre-election levels,” QCP Capital traders said in a Telegram broadcast late Tuesday. “The dollar rose 1.2% to reach a July high of 105, with yields also rising as markets anticipated stronger economic growth and higher budget spending.”
“We expect this bullish momentum to remain strong as we move into 2025,” QCP added.
But now that Trump has been elected president, what’s next for the markets? Traders are quickly turning their eyes to the Federal Reserve’s next round of rate cuts, scheduled for later Thursday. A shift to lower borrowing costs has historically driven bullish sentiment among traders, as cheap access to money fuels growth in riskier sectors.
Analysts expect a 0.25% rate cut this week, which has historically benefited assets like BTC by diluting the value of the dollar and pushing investors toward alternative investments. There is a 97% chance of a 25 basis point cut on Polymarketby 1% for 50 basis points and even lower for higher.
“It is widely expected that rates will be cut by 25 basis points, with the market estimating a 96.8% probability of such a move (according to FedWatch),” said Min Jung, research analyst at Presto Research, in a note to CoinDesk . “However, the interest rate market signals uncertainty, which is evident from the increase in the yield on ten-year government bonds to 4.48%, the highest level in four months.”
“This increase reflects expectations that a Trump election victory could lead to higher budget deficits and inflation. Therefore, the focus for insights will be focused on Powell’s press conference, especially since November does not include an update to the Summary of Economic Projections (SEP),” Min added.
Some are considering hedging bets as Fed Chairman Jerome Powell’s speech sends bearish signals.
“A hawkish stance on Thursday’s FOMC would be an unwelcome development for the market, but staying on the current dovish path would also risk a potential yield drift if bond buyers go on a buyer’s strike through the end of the year ” says Augustine Fan. death of Insights at SOFA, CoinDesk told in a Telegram chat.
“Moreover, there appears to be no end in sight to the supply of bonds, with China likely to respond with a more aggressive easing policy in the face of Trump’s tough import policy. risk dampener at some point,” Fan added.
As such, attention is also being paid to another stimulus package from China, which tended to influence bitcoin prices despite cryptocurrency trading being illegal in the country. China’s potential easing policy in response to US tariffs could create volatility, particularly impacting dollar strength and interest rate movements.
Meanwhile, some traders do not foresee further interest rate cuts in the Trump administration.
“Despite expectations for a decline in the likelihood of rate cuts due to Trump’s “friendlier” proposed policies, the market is still pricing in 1.8 cuts this year and another 3 cuts next year,” QCP said in its Wednesday note .
