On Monday, following Donald Trump’s victory in the 2024 presidential election, both cryptocurrencies and stocks experienced a significant rally, mirroring trends from the previous week. Bitcoin surged to a record high of over $88,000, marking a remarkable increase of 27% since Election Day, where it was valued at approximately $68,000. This dramatic rise reflects a year-to-date growth nearly doubling its price. Likewise, the Dow Jones Industrial Average notably surpassed the 44,000 mark for the first time in its history, rising by another 300 points on the day. The positive market sentiment was fueled by expectations of economic policies favorable to businesses under a new administration. This was indicative not only of larger, established companies but also of smaller-cap firms, with the Russell 2000 index reaching its highest point since 2021, closing up 1.5%.
The market’s upward momentum was particularly driven by major players like Tesla, whose stock rose by 9%. Tesla’s CEO, Elon Musk, is anticipated to have a notable influence in Trump’s second term, leading to heightened investor confidence in the electric vehicle company’s prospects. Since Tuesday, Tesla’s shares have experienced a nearly 50% increase. The Destiny Tech100 Fund, which includes shares of Musk’s SpaceX, similarly surged by 200% over the same period. Additionally, stocks of private prison companies saw significant gains, with firms like Geo Group and CoreCivic witnessing substantial improvements in their market performance, driven by the appointment of Tom Homan, former director of U.S. Immigration and Customs Enforcement, as “border czar.”
Trump’s election has generated optimistic outlooks for the cryptocurrency market, as he has pledged to reverse the strict stance of the current Securities and Exchange Commission (SEC) towards crypto assets. The incoming administration is expected to create a more lenient regulatory environment, providing room for innovation and investment in the cryptocurrency sector. Trump’s intentions to establish a strategic U.S. reserve for bitcoin, alongside his pro-crypto advisers such as Musk and entrepreneur Vivek Ramaswamy, contribute to a bullish sentiment among investors in crypto markets.
Concerns regarding inflation resurfacing under Trump’s economic policies have also influenced market dynamics. Investors are wary that the proposed tax cuts, potential tariffs, and changes in immigration policy could lead to increased spending and higher prices for goods and services. Notably, this speculative nature of potential inflation adds momentum to both cryptocurrencies and traditional assets such as gold. Noelle Acheson, a cryptocurrency market analyst, highlighted that these economic factors could create a supportive environment for digital assets as they are perceived as hedges against inflation.
Beyond bitcoin, other cryptocurrencies experienced tremendous growth as well. Coinbase, the largest crypto exchange in the U.S., saw its shares set to rise approximately 14% on Monday. Robinhood, the trading platform enabling crypto transactions, was also on track to achieve an all-time high, signaling increased interest in these digital currencies among retail investors. Dogecoin, initially popularized as a meme, surged over 160% in the last month, further emphasizing the speculative nature of the market ecosystem.
In conclusion, the combination of Donald Trump’s electoral victory, anticipated economic policies supporting a pro-business environment, and increasing concerns regarding inflation collectively contributed to a significant rally in both stock and cryptocurrency markets. Investors have reacted with enthusiasm to the potential for deregulation and new opportunities, particularly within the cryptocurrency sphere, as regulatory environments appear set to evolve. This market reaction underscores the intertwined relationship between politics, economic policy, and investment trends, particularly in volatile and rapidly changing sectors like cryptocurrencies.
