Dollar and Bitcoin soar as Trump wins presidency

The US dollar has surged and Bitcoin has reached a new all-time high following projections that Donald Trump has won the presidency and will return to the White House for a second term. Traders are betting on a range of potential economic changes under Trump, including tax cuts, rising tariffs, and the possibility of inflationary pressures. As these developments unfold, the global economy braces for what could be a significant shift in economic policy both domestically and internationally.

Alongside the dollar’s rise, Bitcoin has soared to a record high of $75,371.69, surpassing its previous high of $73,797.98 seen earlier this year. This surge is seen as a direct reflection of Trump’s stance on cryptocurrencies, which stands in stark contrast to the more regulatory-heavy approach of the Biden administration.

The political landscape also shifted with the Republican Party likely to take control of the Senate, although some votes are still being counted. This change further boosts market optimism for Trump’s pro-business, tax-cutting agenda.

Dollar Strengthens Amid Trump’s Win

In the wake of the election result, the US dollar surged by about 1.4% against a basket of other major currencies, including the euro, pound, and Japanese yen. The market reaction suggests traders are optimistic about Trump’s policies, including tax cuts and deregulation, which could be seen as favorable for business growth and profits.

In Japan, the Nikkei 225 stock index ended the session up by 2.6%, while the ASX 200 in Australia closed 0.8% higher. US stock markets also looked set to open higher, with major indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq all gaining over 1% in the previous session.

Bitcoin Hits Record High

The price of Bitcoin, which has long been a volatile asset, jumped by $6,000 to reach a new record of $75,371.69. The surge comes amid growing speculation that Trump’s return to the White House could foster a more favorable environment for cryptocurrencies.

Trump has previously made statements suggesting he would aim to position the US as the “bitcoin and cryptocurrency capital of the world,” signaling a more pro-crypto stance. This contrasts sharply with the Biden administration’s tougher regulatory approach, which has seen the Securities and Exchange Commission (SEC) under Gary Gensler crack down on crypto firms.

Trump has even suggested that, if elected, he might fire Gensler, who has faced significant backlash from cryptocurrency advocates due to the SEC’s regulatory moves against the industry. His administration’s position on crypto, including supporting figures like Tesla’s Elon Musk, further fuels optimism in the crypto community. Musk, a well-known cryptocurrency supporter, has long backed Trump’s political campaigns, and his company Tesla famously invested $1.5 billion in Bitcoin in 2021.

Following the election result, Tesla’s shares in Frankfurt surged by more than 14%, with Musk’s influence on the crypto market and his endorsement of Trump potentially playing a role in the price surge.

Market Reactions and Global Concerns

While the dollar and Bitcoin surged, there are signs of nervousness in other areas of the global market. US bond yields, which reflect the returns investors expect on US government debt, also spiked on Wednesday, signaling expectations that Trump’s policies could lead to higher inflation. Analysts speculate that his tax cuts, tariffs, and protectionist trade policies could stoke price increases in the US economy, particularly with regard to consumer goods.

Trump’s tax policies, which are expected to include significant cuts, have been broadly welcomed by large corporations in the US. Investors are hopeful that these policies will drive business growth, though they could also contribute to inflationary pressures. Jun Bei Liu, a portfolio manager at Tribeca Investment Partners, noted that the anticipated tax cuts could result in “higher inflation and less rate cuts” from the Federal Reserve.

Meanwhile, concerns over Trump’s more isolationist foreign policy stance continue to weigh on the global outlook. His pledges to increase tariffs on China and other trading partners have already raised concerns in Asia. Katrina Ell, Director of Economic Research at Moody’s Analytics, pointed out that Trump’s protectionist trade agenda has caused “particular angst” in Asia, with the potential for heightened tariffs impacting global trade.

Additionally, Trump’s stance on Taiwan, a key producer of computer chips vital to global technology, has raised concerns about potential Chinese aggression. Investors are closely watching how the US will handle relations with China, especially in light of the ongoing tensions in the region.

In China, market reactions were mixed. The Shanghai Composite Index closed down 0.1%, and Hong Kong’s Hang Seng index fell by around 2.23%. The uncertainty surrounding Trump’s foreign policy and his economic measures contributed to these declines.

Looking Ahead

In the coming days, investors will be keeping an eye on key economic announcements. The US Federal Reserve is set to announce its latest decision on interest rates on Thursday, with Jerome Powell’s comments on the state of the economy expected to be closely scrutinized. Additionally, on Friday, Chinese officials will likely reveal more details about their plans to address the slowdown in the world’s second-largest economy.

As the dust settles on Trump’s election victory, the markets will likely continue to react to the uncertain global economic landscape, with significant volatility expected in the coming weeks. Investors are preparing for a mix of pro-business policies, rising tariffs, and potential inflationary pressures as Trump begins his second term in office.