The accelerated appreciation of Bitcoin cooled down this Wednesday (13) as investors assess the remaining impact of President-elect Donald Trump’s rhetorical support for cryptocurrencies.
The digital asset has risen around 30% since Trump’s victory in the November 5 elections, reaching a record high of US$89,968 (R$517.5 thousand) on Tuesday (12). It traded around $87,900 as of 11:38 a.m. Wednesday in London, little changed for the session.
Trump has promised to create a friendly regulatory framework for cryptocurrencies, establish a strategic Bitcoin stockpile and make the US the global hub of the sector. Once skeptical of cryptocurrencies, Trump reversed course after digital asset companies invested a lot of money in the election campaign to promote their interests.
His stance spread optimism in cryptocurrencies, raising asset prices to an all-time high. But thorny questions remain about the priorities of Trump and his Republican lawmakers, such as whether macroeconomic issues like China policy and the U.S. economy will be addressed first, pushing digital asset legislation down the pecking order.
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“While we don’t rule out further gains, a lot of good news has already been priced in,” IG Australia Pty market analyst Tony Sycamore wrote in a note.
Dogecoin
One of the best recent performers in crypto is Dogecoin, a token promoted by billionaire Elon Musk and a favorite of meme fans. The Shiba Inu-themed coin, also known as DOGE, is up around 80% in the last five days.
Before the election, Musk suggested he could lead a Department of Government Efficiency, whose initials are an apparent reference to cryptocurrency. Trump on Tuesday announced the creation of the department to cut unnecessary spending, saying Musk would be its co-director. Dogecoin briefly jumped after the statement, before following Bitcoin’s slide.
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In global markets, the spotlight is turning to upcoming US inflation data, which could influence views on the Federal Reserve’s scope for further interest rate cuts.
Higher yields
Treasury yields and the dollar are rising, an indication that investors expect inflationary pressures from Trump’s plan to impose trade tariffs and cut taxes. Stocks have fallen against this backdrop as comparatively higher borrowing costs are a potential headwind for riskier investments, including crypto.
The “relatively moderate” leverage in the crypto market “mitigates the risk of a sharp correction,” according to newsletter author Noelle Acheson Crypto Is Macro Now. “A pause in the market would be welcome, but it is likely to be short-lived. The tailwinds are still strong.”
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Bitcoin briefly surpassed $90,000 on some trading platforms on Tuesday, such as Coinbase Global’s platform. Bullish options bets are concentrated on the largest token reaching $100,000, based on data from Deribit. Inflows into US Bitcoin exchange-traded funds surpassed $1 billion at the start of the week.
