After Donald Trump was announced as the next president of the US on November 6, 2024, the crypto market went on a frenzy. Bitcoin recorded new all-time highs (ATH) passing $91,000 on November 14, 2024, and nearing the $100,000 mark that many crypto enthusiasts and traders have been anticipating.
The Trump win was also good for major stock indexes, including the Dow Jones, S&P 500, and the Nasdaq, all hitting record highs.
Crypto traders smile at their wallets, and Wall Street employees get their biggest bonuses in two years, but is the Trump market rally just a fluke or will it well into his second term in office?
Why is Trump's victory rallying the market?
Trump's victory is having this effect on the market because investors expect the new president to implement favourable policies. One of such policies is cutting corporate tax from 21% to 15%.
This means that businesses will pay lower taxes, have more money to reinvest, hire more people, pay more dividends to investors, or buy back shares.
This crypto bull run is also based on the president-elect's promises, which include creating a strategic crypto reserve that will see the US government — the government with the most bitcoin in the world — buy more cryptocurrencies.
This means the US government will add more bitcoins to its bitcoin holdings valued at over $2 billion, creating a scarcity that drives up the price of bitcoin and subsequently the entire crypto market.
Trump also promised to fire Gary Gensler, the US Securities and Exchange Commission's (SEC) Chairperson, who has been tough on crypto companies and protocols in the last few years.
While the US president does not have the authority to fire the chairperson of an independent federal agency like the SEC, Gensler has received lawsuits from 18 US states and the Defi Education Fund.
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Will Trump-led market rally last?
The crypto market is notoriously unpredictable; however, there are indications that the Trump-led bull run may not last.
Nelson Peltz, a billionaire investor and Trump supporter, said the euphoria of the stock market rally will end soon.
Peltz's view corroborates predictions made by Goldman Sachs in October, which show that the stock market will not give double-digit returns annually over the next ten years. In the past decade, investors have enjoyed an average of 11% in annual returns, but Goldman Sachs puts returns over the next decade to be between 3% and 7%.
While this downward revision is normal during a strong rally over the past few years, another reason for it is that 36% of the market is controlled by the ten largest tech corporations, including Apple and Microsoft.
These companies make up the largest valuations ever seen since the dot com bubble in the 2000s, and a reset is bound to happen at some point.
The market rally might also not last because Trump's policy to impose new tariffs on imports could cause the US' already reducing inflation to rise again.
Will the Trump-led crypto bull run last?
Trump's promises are of interest to the American and global crypto community, but if he can't keep all these promises, the crypto bull run will be short-lived.
However, Coinbase CEO Brian Armstrong is confident that Trump's election is a new dawn for the crypto industry; he calls it an opportunity to rebuild.
Armstrong, the CEO of one of the largest crypto companies in the world, said the "pro-crypto congress" means that there will be some regulatory clarity on issues where the entire industry has been in the dark under Gary Gensler.
In July this year, the US was partly responsible for the short-lived bull run that saw bitcoin reach a new ATH of $72,000. The government announced that it would sell off part of its crypto holdings worth $2 billion.
Interestingly, it's also possible that the market rally has nothing to do with the elections. Adam Parker, Founder of Trivariate Research, told The New York Times that investors are just relieved that the elections and threats of violence are over; "that brings relief and certainty, " he said.
While these positions do not tell us how long the crypto bull run will be, crypto investment tips such as investing what isn't immediately needed or what you can afford to lose might be the best advice for intending investors.
