(Kitco News) – Financial markets responded positively to the failed assassination attempt on former President and current Presidential candidate Donald Trump in what most are now referring to as the ‘Trump Trade,’ with a large percentage of analysts predicting a Trump victory in November.
Trump had been surging in the polls even before Saturday’s events following President Joe Biden’s poor performance in last month’s debate, which sparked a wave of comments from the Democrat support base saying Biden should withdraw from the race to give someone with a better chance of winning the opportunity to run.
Market watchers see the Republican nominee as friendlier on taxes and business regulations, while his defiant response to being shot in the ear – raising his fist and repeatedly saying ‘fight’ – cast him in a ‘strong leader’ role amid escalating global geopolitical tensions and war.
The crypto market had a notably positive response to the weekend’s events, especially since Trump – who recently declared himself to be the ‘crypto president’ – survived the attempt on his life.
Data provided by Polymarket shows that bettors now put the odds of Trump winning the election at 72%, while the odds of Biden winning are at 18%.
“Republican candidate Trump survived an assassination attempt over the weekend, which the market interprets as significantly increasing his chances of winning the future election,” said Ryan Lee, Chief Analyst at Bitget Research, in a note to Kitco Crypto.
“The Republican Party's support for cryptocurrency is evident in several aspects: 1) accepting cryptocurrency donations; 2) Trump will attend a BTC conference on the 27th of this month and deliver a speech; 3) the 2024 campaign platform includes a promise to protect the U.S. crypto mining industry,” he added.
"In the immediate aftermath of the assassination attempt, there was a surge of enthusiasm within the crypto community, particularly among those who see Trump as a strong advocate for crypto,” said Gracy Chen, CEO of Bitget. “Within 24 hours, multiple Trump-themed tokens were launched, witnessing significant gains. This quick rebound after a few weeks of drops directs the market's perception of Trump as a key figure in the endorsement of crypto in the West.”
“In the coming months, Trump-themed tokens may continue to experience pump-and-dump patterns in response to the election updates,” she added. “However, in the long term, these tokens lack solid fundamentals and carry significant political risk, making it difficult for them to be listed on major trading platforms. Therefore, there is a higher risk associated with long-term investment.”
Lee also noted that a major source of weakness in recent weeks, the sale of a large number of Bitcoins held by the German government, is now over as “The German government has sold all its tokens, ending the short-term BTC selling pressure.”
“Mt. GOX has only conducted on-chain transfer tests and has not yet made substantial BTC repayments,” he added. “FTX is expected to complete repayments in the second half of this year, with $16 billion in stablecoin assets flowing into the market.”
Another positive sign highlighted by Lee is the “Continuous Net Inflows into BTC Spot ETFs.”
“The average holding cost for clients of new BTC spot ETF issuers is around $55,000,” he said. “Over the past six trading days, BTC spot ETFs have seen continuous net inflows totaling nearly $1.2 billion, effectively countering the German government’s sales.”
While the market movements on Monday have been tied to the weekend’s events regarding Trump, Matteo Greco, Research Analyst at Fineqia International, noted that the outlook for the crypto market was already improving even before the attempt on Trump's life.
“Bitcoin (BTC) ended the week at approximately $60,800, marking an 8.8% increase from the previous week's closing price of around $55,850,” he said. “BTC saw gradual growth between Monday and Friday, fluctuating between $56,000 and $58,000 before a strong weekend rally pushed it to $60,800. The positive trend continued overnight, with BTC reaching about $63,000 and maintaining that level at the time of writing.”
Greco also highlighted the gains for spot BTC ETFs, which he said “experienced robust inflows last week, with every day showing strong net inflows, totalling over $1 billion for the week. Friday alone saw a net inflow of $310 million, the highest daily amount in over a month. This significant influx brought the cumulative net inflow for BTC Spot ETFs to $15.8 billion since inception.”
“For the first time, BTC Spot ETFs now hold over 4.5% of the total BTC supply, with a combined AUM of approximately $51.3 billion,” he added. “Despite the strong net inflows, trading volumes remain below average, totalling $6.9 billion for the week and almost $1.4 billion daily. This volume, though below the average since inception, has increased compared to recent weeks and is relatively high for July, a historically low trading period for both traditional finance and digital assets.”
Another tailwind for the market is the pending launch of spot Ethereum (ETH) ETFs, “with many market participants expecting the SEC to approve trading this week,” Greco said. “Even if not this week, the market anticipates a launch within July, likely within a couple of weeks.”
“Following the success of BTC Spot ETFs, strong inflows are expected for ETH Spot ETFs, adjusted for the market cap difference between BTC and ETH,” he concluded. “Analysing net inflows in proportion to BTC will be crucial to estimate the investors’ appetite for digital assets that are not BTC.”
And while sentiment and prices are higher on Monday, analysts at Bitfinex warned investors about getting too overconfident that it’s up only from here as over the past several months, “mini-rallies that started during the weekends have proven to be short-lived in most cases with price retracements arriving alongside Hump Day.”
“Over the past month, Saturdays have seen an average return of 1.6 percent for BTC, reflecting a noticeable uptick in weekend performance,” they said. “When broadening the scope to include the entire ‘summer range’, covering the past three months, the average return on Saturdays slightly decreases to 0.9 percent. This data suggests that weekends, particularly Saturdays, have been relatively favourable for Bitcoin investors during this period, with a consistent pattern of positive returns.”
“Another important factor is that, in our view, crypto asset prices in general in the current period have been determined by the news agenda, rather than fundamentals,” they added. “Selling pressure concerns have not completely disappeared as Mt. Gox creditors are also scheduled to receive their BTC payouts over the next couple of weeks. We expect these headlines to continue to have some impact on price before a complete pricing in of the situation.”
At the time of writing, Bitcoin trades at $63,144, an increase of 5.23% on the 24-hour chart.
BTC/USD Chart by TradingView
