(Kitco News) – The riskier side of financial markets trended higher on Friday, bolstered by optimism that President-elect Donald Trump's policies will boost the economy. Thursday’s 25 basis point interest rate cut by the Fed also gave traders more cause to remain engaged, as market watchers see the development as more signs of the return of easy money policies.
Stubborn inflation threatens to put a halt to the Fed’s interest rate plans in 2025, however, with many analysts wondering if they will be able to stick to their goal of implementing a total of 100 bps worth of cuts during the year.
“Market expectations are leaning heavily towards a rate cut in December, reinforced by the Federal Reserve's recent reduction by a quarter percentage point in November,” said analysts at Secure Digital Markets. “However, there's a growing speculation of a potential pause in January, with market odds favoring a 67% probability of a December cut and a 33% likelihood of holding rates steady.”
Rising prices were aided by a pullback in the U.S. Dollar and Treasury Yields, which gave back some of their post-election gains. The move by investors to embrace risk-on sentiment lifted the S&P 500 above 6,000 for the first time in history, while the Dow also hit a new milestone in climbing above 44,000.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the green, up 0.38%, 0.59%, and 0.09%, respectively.
It was a different story for precious metals, however, as both gold and silver trended lower throughout the trading day. At the time of writing, spot gold trades at $2,683.20/oz for a decline of 0.85% on the session, while spot silver has fallen 2.27% and trades at $31.26/oz.
Data provided by TradingView shows that Bitcoin (BTC) spent the morning consolidating above $76,000 as bulls gathered their strength before making a push for a new all-time high. That push came in the afternoon, with King Crypto rising to $77,150 on Coinbase, beating the record of $77,000 set on Thursday.
BTC/USD Chart by TradingView
The strength of Bitcoin has been aided by heavy inflows into spot BTC exchange-traded funds, which saw a record-breaking $1.4 billion worth of inflows on Thursday.
HOOVER CITY: Bitcoin ETFs took in a record-smashing $1.4b yesterday (the Trump effect). $IBIT alone was +$1.1b. That's +$6.7b in past mo and $25.5b YTD. All told they feasted on about 18k btc in one day (vs 450 mined) and are now 93% of the way to passing Satoshi's 1.1mil btc. pic.twitter.com/dNLoENlDB3
— Eric Balchunas (@EricBalchunas) November 8, 2024
At the time of writing, Bitcoin trades at $76,530, an increase of 0.39% on the 24-hour chart.
More upside ahead
As was predicted by many analysts and economists, markets have responded positively to Trump’s re-election, and the rallies higher are expected to continue in the near term.
“The U.S. elections delivered the outcome that was almost universally considered the most bullish for equities and, especially, crypto: a red sweep, with not just a Republican president, but also a Republican Senate and (almost certainly) House majority,” said market analyst Bloodgood. “In other words, it’s not just that President-elect Trump promised to fire Gensler and bring much more favorable crypto regulations (partly because he’s launching a crypto project himself), but also that he’ll have zero obstruction from Congress in the process.”
“As expected, this led to a rally in crypto and equities, but interestingly, while Tesla was the stock that everyone expected to outperform the most—and it did post a 15% gain the day after the election—Coinbase had double the gain at just over 30%,” he noted. “This is, of course, partly due to Bitcoin’s rally, but also in large part because of the expectations of better crypto regulation.”
Bllodgood highlighted that while the Fed’s rate cut has led to further optimism, Trump’s election is the driving force behind the current rally and has overshadowed concerns about a potential bounce back in inflation.
“The election was followed by another important headline, namely the FOMC meeting yesterday, where the Fed announced a single 25 bps cut, in line with most expectations,” he said. “Powell’s tone was less confident about inflation being on the right track, at least compared to previous meetings, but this didn’t have much of an impact on the markets as it paled in comparison to the election.”
While Trump is cited as the impetus behind Bitcoin’s rally to a new all-time high, Bloodgood said that King Crypto was on this track regardless, due to a multitude of factors, including the regular halving cycle and macroeconomic concerns.
“Some may say that Trump winning the election was the reason Bitcoin broke out and reached a new ATH, which is partially true, but BTC's ATH was inevitable—Trump just sped up the process,” he said. “If you’ve been following my analysis, you could clearly see the macro structure shift from bearish to bullish with a series of higher highs on the weekly timeframe.”
Bloodgood said that a scenario he had been forecasting played out perfectly. “We first tested the ATH, got rejected, and then retested the breakout area, which was our entry point,” he noted. “It doesn’t get easier than this.”
“Now, as we enter price discovery, the only level to keep an eye on is the previous ATH,” Bloodgood said. “We’ll want to ensure we keep making higher lows on the weekly timeframe.”
And touching on the surge in inflows into spot BTC ETFs, Bloodgood said that “In this kind of an environment, it makes sense to expect decent Bitcoin ETF flows, but what happened yesterday was even more than that, namely an all-time record with almost $1.4 billion of net inflows.”
“The Ethereum (ETH) ETFs were far less impressive in terms of numbers, but one important bit of good news was the fact that the state of Michigan submitted a filing disclosing its purchase of ETH ETFs, making it the first U.S. state to own Ethereum,” he said. “All in all, crypto has come a long way, and it looks like we’re entering a period of upside acceleration in terms of regulation, which will inevitably lead to a similar trend with prices.”
According to John Glover, Chief Investment Officer at Ledn, while Bitcoin’s post-election was impressive, it didn’t quite make the impact that many expected.
“Well the election has come and gone, and while we did see the expected jump in BTC price on a Trump victory, it wasn’t as impactful as most predicted,” he said in a note shared with Kitco Crypto.
“From an Elliott Wave perspective however, things are unfolding as predicted,” he added. “We have completed wave (iii) (green line) of wave 5 (yellow line), in the larger Wave III (orange line). Wave III should take us to circa $82k followed by a pullback to circa $68k before we push towards $100k in Q2 next year.”
“How can I be calling for a pullback when Trump has been elected?!” he questioned. “Remember, he doesn’t take control until January 20th, so we have over 2 months before he can enact any of the myriad of promises he made on the campaign trail, and impatient longs will take profit. We’ll also likely see a portfolio rebalancing from asset managers who are now overweight BTC vs their target.”
Altcoins finish the week mixed
Altcoins traded mixed as traders realized profits on recent gains, with the top 200 tokens evenly split between winners and losers.
Daily cryptocurrency market performance. Source: Coin360
Cronos (CRO) saw the largest gain, increasing by 22%, while POL (POL) climbed 16.2%, and Cardano rallied 13.3%. ConstitutionDAO (PEOPLE) was the biggest loser, falling 11.2%, while Goatseus Maximus (GOAT) lost 8.4%, and Mog Coin (MOG) declined by 8.1%.
The overall cryptocurrency market cap now stands at $2.59 trillion, and Bitcoin’s dominance rate is 58.8%.
