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Investors betting that Donald Trump’s incoming administration will be a boon for the cryptocurrency industry drove the price of bitcoin to a new record on Monday, while the dollar advanced to a four-month high.
The world’s largest cryptocurrency, which has hit a series of record highs since the November 5 election, surged more than 12 per cent to surpass $86,000 for the first time, as the Republican party looked increasingly likely to take control of the House of Representatives, having already won a majority in the Senate.
Trump’s victory and the increasing likelihood of a Republican sweep presents “a very unique opportunity to advance transformational legislation” to “make America the world powerhouse for bitcoin and crypto”, said David Bailey of BTC Inc, organiser of the Bitcoin Conference, where the president-elect spoke earlier this year.
The total value of the global crypto market rose above $3tn for the first time in three years, according to crypto data provider CoinGecko. Cryptocurrency exchange Coinbase rose about 23 per cent while broker Robinhood added 10 per cent.
A Trump administration is expected to be supportive of the crypto industry and, with control of both chambers of Congress, would have greater power to enact favourable legislation.
“We are seeing absolute bullish sentiment,” said Scott Acheychek, chief operating officer of REX Financial, which runs a suite of leveraged crypto exchange traded funds.
The dollar was up about 0.5 per cent against a basket of its peers on Monday, passing the level it hit the day after the election and taking it to its highest since July. The euro was down more than 0.6 per cent, having fallen during the session to as low as $1.063, its lowest level since April.
In New York mid-afternoon, both the S&P 500 and Nasdaq Composite were flat. Shares in Tesla were up 8 per cent. The electric-car maker has surged past a $1tn market capitalisation since election day, helping boost chief executive Elon Musk’s personal net wealth by about $32bn.
“Markets are in euphoria territory right now,” said Drew Pettit, director of US equity strategy with Citi. “The optimists are winning by thinking that Trump will be market- and economy-friendly. They are skipping the argument that bad things may happen.”
“What we are seeing is that people are keen to jump on the Trump trade sooner rather than later,” said Emmanuel Cau, head of European equity strategy at Barclays.
The performance of crypto and other so-called Trump trades showed growing anticipation that the former president would take a light-touch approach to regulation during his second term, said Mabrouk Chetouane, head of global market strategy at Natixis Investment Managers.
“Investors are willing to take risks, even with more protectionism in the pipeline,” he said, referring to Trump’s plans to sharply increase tariffs on imports to the US.
The Republican candidate’s decisive victory drove traders to price in his promises of tax cuts and tariffs, fuelling the dollar and sparking a sell-off in US government bonds.
Trading in Treasuries, which have recovered much of their post-election losses, is closed for the Veterans Day public holiday in the US.
The Financial Times reported last week that Robert Lighthizer, Trump’s trade envoy during his first-term trade war with China, had been asked to take the job again. “Any clues on Trump’s appointments may be market moving,” said Deutsche Bank’s Jim Reid.
The Mexican peso, which had performed poorly in the run-up to the election and was highly volatile on election day, was down 1.2 per cent at 20.41 to the dollar.
Additional reporting by Will Schmitt in New York and Shotaro Tani in London