Bitcoin reached new heights on Tuesday, nearing the £90,000 mark as optimism around potential crypto-friendly policies under Donald Trump’s new presidency boosted market sentiment. This surge comes in the wake of Trump’s victory in the 2024 U.S. presidential election, with investors betting that his administration will bring favourable regulations to the cryptocurrency market.
Bitcoin Surges as Trump Promises Crypto-Friendly Policies
Since the election results, Bitcoin, the world’s largest cryptocurrency, has continued to climb, reflecting investor expectations that the Trump administration will create a more supportive regulatory environment for digital assets. Trump’s campaign included promises to position the United States as the global leader in crypto, with hints at establishing a national Bitcoin reserve. This has spurred optimism among investors and attracted substantial institutional interest in crypto, driving prices higher.
Bitcoin’s recent momentum has held steady even as other risk-sensitive assets like stocks faced cooling investor sentiment. On Tuesday, Bitcoin was trading up by 9.4% at £88,313.1, having reached a record peak of £89,436.1 earlier in the session. This increase occurred despite a strengthening U.S. dollar, as speculation around Trump’s regulatory stance overshadowed any negative impact from currency fluctuations.
The “Trump Effect” Powers Dogecoin and Altcoin Markets
The “Trump effect” isn’t only benefiting Bitcoin; major altcoins have also experienced significant gains. Dogecoin, a meme cryptocurrency often supported by Elon Musk, saw a rally of nearly 42%, reaching its highest level since May 2021. The surge in Dogecoin prices is partly fuelled by speculation that Musk, a notable advocate for the token, may have a role in Trump’s administration. Investors have flocked to Dogecoin amid the excitement, with many viewing Musk’s involvement in the new government as a potential advantage for the token.
Other top cryptocurrencies also rode the wave of optimism on Tuesday. Ethereum, the second-largest cryptocurrency, rose by 4.4% to £3,319.0, approaching a three-month high. XRP, Solana (SOL), Polygon (MATIC), and Cardano (ADA) also saw gains ranging from 1.9% to 5.6%, reflecting broader confidence in the altcoin market.
Bitcoin’s Resilience Against a Stronger Dollar
Interestingly, Bitcoin’s rally has persisted despite a rising dollar, which usually dampens interest in riskier assets. The dollar recently hit a four-month high as markets priced in the likelihood of more inflationary policies under Trump, possibly leading to higher interest rates in the future. However, the promise of a crypto-friendly approach seems to have offset any concerns about the stronger dollar, with investors continuing to pour capital into Bitcoin and other cryptocurrencies.
Institutional interest in Bitcoin has been particularly notable. Over the past week, crypto exchange-traded funds (ETFs) have attracted significant inflows, with BlackRock’s iShares Bitcoin Trust (IBIT) leading the way. After Trump’s election win, IBIT saw over £1 billion in inflows within a single day. The popularity of IBIT even surpassed BlackRock’s gold ETF in terms of total assets held, highlighting a shift in institutional preferences toward digital assets over traditional commodities like gold.
Mt Gox’s £2 Billion Bitcoin Movement
Adding to the market’s recent movements, Mt Gox, the now-defunct crypto exchange, transferred approximately £2 billion worth of Bitcoin to two wallets on Monday. Historically, when large sums of Bitcoin are mobilised, it often indicates an impending sale or distribution. Mt Gox, which was once a leading Bitcoin exchange, collapsed in 2014 and still owes significant reserves to creditors.
While the scheduled distribution of Mt Gox’s Bitcoin reserves has been delayed until late 2025, the recent movement raised concerns over a potential impact on Bitcoin’s price. Yet, Bitcoin’s upward trajectory remained unaffected, with investors seemingly unphased by the possibility of increased Bitcoin liquidity in the market.
What This Means for the Future of Cryptocurrency
The recent surge in cryptocurrency prices, led by Bitcoin, underscores the high expectations surrounding Trump’s presidency and his promises of favourable regulation. Investors are hopeful that a supportive environment for digital assets in the U.S. will drive mainstream adoption and bring greater legitimacy to the market. Institutional participation in cryptocurrency is also likely to grow as regulatory clarity and policy support strengthen, making it easier for large financial players to invest in crypto.
The continued rise of Bitcoin and other digital currencies suggests that cryptocurrency could further disrupt traditional financial systems. The shift in market sentiment towards crypto could affect commodities like gold, which may lose some of its allure as a safe-haven asset. If the crypto market’s growth continues at this pace, it could attract more capital traditionally invested in commodities, affecting global asset allocations.
In summary, Trump’s crypto-friendly approach has injected fresh momentum into the market, creating an environment where digital assets are likely to flourish. This surge could mark the beginning of a new era in which cryptocurrencies play a more prominent role in global finance, potentially reshaping the commodities markets for years to come.
Source: (Investing.com)
