The ‘Trump trade’ was already a success for the crypto industry and the stocks , but now the latest research suggests Donald Trump’s inauguration could be only ‘short time high for crypto’. As per the research, the bullish trends may cool-off as the President elect takes the office on January 20, 2025.
Historical Trends: Short-Term Crypto Surge post Donald Trump’s Inauguration
Based on the historical data during U.S. election years, it is predicted that the cryptocurrency market’s bullish momentum could face a slowdown after the inauguration of the President-elect Donald Trump.
Data from Bloomberg and Macrobond Financial indicates that markets tend to surge post-election but correct after inauguration. Thus, historically, both U.S. equities and cryptocurrencies like bitcoin tend to perform strongly in the weeks following a presidential election, which turned out to be the case for the 2024 elections too. However, this upward trend often cools down once the new president ‘officially’ takes office.
Research data further implies that this short-term is generally evident especially when a Republican takes the office, since the party’s outlook is perceived as pro-business by the general public.
Scott Chronert, a U.S. equity strategist at Citi, suggested in a recent report,
“[I]nvestors should tactically fade a postelection rally should the S&P 500 exceed our 6100 year-end bull case target, which roughly aligns with a +5% index move from election day.”
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As of December 2, the S&P 500 stands at 6,047, reflecting a nearly 4.5% growth since November 5, according to Google Finance.
Cryptocurrencies, too, have experienced notable gains since Trump’s election victory. Bitcoin has surged more than 30%, Solana (SOL), Ethereum (ETH) and now Ripple (XRP), too has shown similar strength. However, analysts believe this trend might face volatility post-inauguration.
Ryan Lee, chief analyst at Bitget Research, warned that Bitcoin could see a correction of up to 30% before resuming its upward trend, potentially going down to $70,000.
Despite potential corrections, many investors expect the crypto bull market to extend into 2025.
Apart from this, Bitcoin’s correlation with U.S. equities, particularly technology stocks on the Nasdaq, has weakened recently, and fell to 0.46 in March 2024, which is the lowest in 4 years. On the other hand, Ethereum (ETH) shows stronger correlation with the Nasdaq, at approx 0.66, according to MacroAxis data.
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Also Read: Donald Trump to Grant SEC’s Crypto Regulatory Authority to CFTC
