(Kitco News) – Asset prices extended their Monday rally higher in trading on Tuesday as stocks, gold, and cryptocurrency prices surged, setting new records as investors started to feel the FOMO characteristic of bull market rallies.
The Dow Jones continued its impressive rally above 40,000, hitting a new all-time high of 40,988 amid growing conviction from investors that an interest rate cut is near. Gold also surged to a new record level, topping out above $2,474, an increase of 1.87% on the day.
“Investors are betting that the failed assassination attempt on former President Donald Trump will benefit his candidacy and the Republican Party in the upcoming November elections,” said analysts at Secure Digital Markets. “A GOP victory could lead to favorable tax and fiscal policies for investors.”
The CME FedWatch Tool shows that investors now put the odds of a rate cut in September at 100%, helping explain the all-in mentality driving markets higher.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the green, up 0.64%, 1.85%, and 0.20%, respectively.
Data provided by TradingView shows that after hitting a high near $65,000 on Monday, Bitcoin (BTC) pulled back to $62,440 in early trading on Tuesday after news headlines broke that the Mt. Gox Bitcoins had been sent to Kraken in preparation for their distribution to creditors.
This renewed fears of a large sell-off following the recent sale of 50,000 BTC by the German government, which was widely blamed for the weakness seen in Bitcoin over the past few weeks.
“Mt Gox has re-ignited the Bitcoin selloff scare in the market, a trend that might impact traders’ sentiment more than Germany’s selloff,” said Akshay Nassa, founder of Chimp Exchange. “In a likely move to repay its creditors, the exchange transferred 44,527 BTC worth approximately $2.84 billion to an internal wallet and additional transfers of 48.641K BTC valued at $3.07B were sent to an unknown address on July 16.”
“Following this latest transfer, Mt Gox now holds 138.985K BTC valued at $8.86 billion,” he added. “The repayment is imminent in the coming months, and the expectation is that beneficiaries will sell their coins as all are in profit at the moment. The market response, which saw BTC drop from $65k to $63K, might prove more grievous if no complementary positive news hits the market soon.”
BTC/USD Chart by TradingView
“BTC encountered renewed selling pressure on Tuesday, triggered by blockchain data indicating that the now-defunct exchange Mt. Gox commenced internal coin movements in preparation for potential creditor repayments,” said analysts at Secure Digital Markets. “Currently, BTC is testing its 50-day moving average, which could serve as short-term resistance. Should prices retract from this level, we may observe a correction towards the $60,000 - $62,000 range, aligning with the 20-day moving average.”
At the time of writing, Bitcoin trades at $64,902, an increase of 1.95% on the 24-hour chart.
Favorable political landscape
According to Joel Kruger, Market Strategist at LMAX Group, the bounceback for Bitcoin can be attributed to dip-buyers taking advantage of low-priced Bitcoin and a favorable turn of events in the political realm.
“We believe the price recovery is a combination of medium and longer-term players looking to build exposure after a healthy dip,” Kruger said in a note to Kitco Crypto. “We’re also seeing politics playing into the rally, particularly as the odds for a crypto-friendly President Trump increase following this past weekend.”
Jacob Martin, a crypto lawyer and co-founder of 2 Punks Capital, also sees the potential for a favorable political landscape boosting sentiment.
“I think it’s pretty clear that one party is putting forward effort to be both pro-innovation and pro-keeping-innovation-on-American-soil while the other is constantly pushing narratives against big tech (or with them), against little tech, and against innovation in the realm of AI, crypto, and beyond,” he said in a note to Kitco Crypto.
“90m+ Americans hold crypto via Coinbase or ETFs or direct or otherwise,” he added. “Now that abortion, 2nd Amendment, and gay rights are all essentially removed from the official GOP party platform, crypto and America-forward innovation becomes one of the few major things worth considering for single-issue voters. I think it’s pretty important.”
“A Republican win is likely a boon for crypto and American tech in general. Would assume a stock market rally to coincide,” Martin concluded. “At the same time, a Democrat win right now, with Biden as the nominee and a non-removal of Gary Gensler, that would be about the most bearish and confusing possible outcome for the next few years in crypto.”
And according to Neil Roarty, an analyst at Stocklytics, Trump’s choice of a pro-crypto Vice President has also boosted sentiment for crypto investors.
“Cryptocurrency traders responded with jubilation to the announcement that JD Vance would be Donald Trump’s running mate in November's election,” he said. “Vance is a long-time advocate of cryptocurrency, and is even on public record as holding Bitcoin.”
“So it was of little surprise that crypto markets rallied after his VP nomination was announced,” he added. “Bitcoin added about three percent to its value in the hours immediately after. That was part of a 15 percent increase over the past three days as rumours began to swirl that Trump would be selecting the Ohio senator.”
“The market cooled a little this morning, with Bitcoin regressing back around four percent in early trading, but crypto investors remain optimistic,” Roarty noted. “With Vance next to Trump in the White House - an outcome that’s looking increasingly likely - there is a sense that pro-crypto policy could be on the agenda come 2025.”
Altcoins improve on Monday’s rally
The altcoin market also benefited from rising sentiment as 90% of the tokens in the top 200 recorded gains on Tuesday.
Daily cryptocurrency market performance. Source: Coin360
Worldcoin (WLD) was the top performer, increasing 24.3%, followed by a gain of 20% for Terra Classic (LUNC), and an 18.2% climb for Core (CORE). WEMIX (WEMIX) was the biggest loser, falling 8.3%, while TRON (TRX) lost 2.8%, and Uniswap (UNI) declined by 2.7%.
The overall cryptocurrency market cap now stands at $2.38 trillion, and Bitcoin’s dominance rate is 53.8%.
