Bitcoin’s Recent Surge: A 9% Increase Fueled by Political Speculation
In a remarkable turn of events, Bitcoin has experienced a notable surge of 9% over the last week and an impressive 31% since hitting its September low. This surge is largely attributed to market speculation regarding a potential victory for Donald Trump in the upcoming US presidential election scheduled for November 5. As a result, the world’s leading cryptocurrency has climbed to over $69,000 before slightly retreating to approximately $67,000 on Monday, marking its highest value since July 31. In the European market, Bitcoin briefly surpassed €64,000 on the same day before settling at just above €62,300 by 5:20 am CET on Tuesday.
Currently, Bitcoin’s price stands only 8% below its all-time peak of $73,000 (€64,700), which was achieved in March. This earlier rally was driven by optimism surrounding the anticipated approval of a spot Bitcoin ETF and expectations of a significant Bitcoin halving event set for April.
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The ongoing upward momentum in Bitcoin’s value can also be linked to the upcoming US election and the easing monetary policies being implemented by central banks. However, some analysts caution that without specific pro-Bitcoin policies articulated by Trump, the current market frenzy may be excessive. Michael McCarthy, a market strategist and Chief Commercial Officer at Moomoo Australia, commented, “While Trump has attracted the attention of crypto enthusiasts during this campaign, there are no concrete policy announcements that fully justify the recent rally in Bitcoin attributed to Trump.” He added, “Having climbed to within 8% of the all-time high, the risks associated with purchasing at this juncture may outweigh the potential rewards.”
The Trump Trade Phenomenon
The recent uptick in Bitcoin prices has been largely linked to what is being referred to as the “Trump trade.” This financial market trend reflects the optimism surrounding the prospect of Donald Trump’s return to the presidency following the election on November 5. The former president has been openly supportive of cryptocurrencies, vowing at the Bitcoin 2024 conference to transform the United States into “the crypto capital of the planet” and to elevate Bitcoin to a position of global dominance. Additionally, Trump has promised to remove Securities and Exchange Commission (SEC) Chair Gary Gensler, stating that he would appoint an SEC leader who seeks to “build the future, not block the future” if he is re-elected.
According to data from Bloomberg, US spot Bitcoin ETFs have witnessed a remarkable net inflow of nearly $2.4 billion (€59 billion) in the six days leading up to October 18. This influx indicates that Bitcoin investors are increasingly accumulating cryptocurrency-related assets, speculating that regulatory conditions for cryptocurrencies will be more favorable under a Trump administration compared to the current stance under Kamala Harris. Recent polling data suggests that the race between the two candidates is extremely close, but betting markets have shifted in favor of a Trump victory, influencing financial market trends toward assets that may benefit from his proposed policy changes.
While some analysts forecast that Bitcoin could soar to $100,000 (€92,000), others express concerns that Trump’s tariff policies might reignite inflationary pressures, which could, in turn, negatively impact cryptocurrency markets. Trump recently remarked, “The most beautiful word in the dictionary is tariff,” during a speech at the Economic Club of Chicago.
A Bitcoin-Friendly Macroeconomic Climate
The year 2024 has marked a resurgence of enthusiasm for cryptocurrencies, with Bitcoin showcasing a robust 59% increase year-to-date. The overarching global macroeconomic environment has also played a critical role in propelling crypto markets, particularly Bitcoin prices. Renowned for their high-risk profile, cryptocurrencies have experienced a substantial rally amid central banks’ easing cycles, especially following a significant policy shift by the Federal Reserve. Historically, Bitcoin has tended to trend upward during periods of monetary easing by the Fed. For context, during the pandemic in 2020, Bitcoin’s price soared by an astounding 1,600%, reaching over $64,000 in April 2021 from the previous year’s levels.
Recent expansive stimulus measures implemented by China, coupled with signs of accelerating rate cuts by other major central banks, may have further energized Bitcoin’s upward trajectory. In essence, the loose liquidity in the market has emerged as a pivotal driver behind the remarkable rise in cryptocurrency markets.
