Bitcoin surged to a record high, stocks advanced and the US dollar climbed the most in a year as investors turned to so-called Trump trades as Donald Trump emerged victorious over Democratic rival Kamala Harris in the US presidential election.
The world's largest cryptocurrency rose by about 9 per cent to $75,372. It was trading at $74,398 at 3.30pm UAE time on Wednesday. It surpassed the March peak when investors were cheered by inflows into US Bitcoin exchange-traded funds.
Bitcoin has now advanced 75 per cent this year, topping other asset classes such as stocks and gold. US spot-Bitcoin ETFs, from issuers such as BlackRock and Fidelity Investments, have attracted $23.5 billion of net inflows after their launch at the start of the year.
Second-ranked token Ether added about 8 per cent. Dogecoin, a meme-crowd favourite promoted by Mr Trump supporter Elon Musk, rallied 31 per cent at one point.
The Bloomberg Dollar Spot Index climbed as much as 1.7 per cent to its last November peak amid haven demand and as traders returned to wagers seen as benefiting from low-tax and high-tariff policies under a potential Trump administration.
Equities indexes in parts of Asia as well as Europe climbed, while shares in Hong Kong slipped. US equities futures also advanced.
Support for crypto
Bitcoin is viewed by many as a so-called Mr Trump trade because the president-elect embraced digital assets during his campaign.
Mr Trump vowed to make the US the crypto capital of the planet and appoint regulators who love digital assets. Ms Harris adopted a more measured approach, pledging to support a regulatory framework for the industry.
Cryptocurrencies, which do not generate income or dividends, rely heavily on investors’ perception of value. Bitcoin and the overall crypto market have proven to be highly volatile, with wild swings influenced by anything from economic factors to tweets.
The sector has also had to endure high-profile company closures, cyber attacks and criminal cases against top executives, most notably FTX's Sam Bankman-Fried who was eventually sentenced to jail.
Options traders, meanwhile, have increased bets that Bitcoin will reach a peak of $80,000 by the end of November regardless of who wins the election.
“The US elections and the Fed decision are expected to dictate the outlook for crypto through the end of the year. Positioning towards the aforementioned events has followed election betting odds,” Manuel Villegas, digital assets analyst at Julius Baer, said.
“The policy backdrop around crypto and regarding the Securities and Exchange Commission is expected to tilt considerably if a Republican administration takes office. A clear oversight-defining framework is expected by the market.”
Potential changes in the regulatory backdrop are the primary cause for crypto markets’ positive reaction to the increasing tilt in betting odds towards the Republicans, he said.
The bullish market mood is set to persist following a Republican administration outcome, where a sweep scenario would produce the fastest and strongest policy changes, according to Mr Villegas.
Impact on currencies
Mr Trump's tariff and immigration policies are seen as inflationary by analysts, buoying the dollar.
“Trump’s core policies on taxes, tariffs, and immigration are considered inflationary. This is why we have seen a big rise in treasury yields and the US dollar until the start of this week,” said Fawad Razaqzada, market analyst at City Index and Forex.com.
“A Trump victory could spell trouble for the yuan, euro, Canadian dollar and Mexican peso, among other currencies. The threat of universal tariffs could hit other risk assets, too.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the US dollar is rallying against most majors in the traditional currency markets. The euro – which is one of the most vulnerable major currencies to the Trump presidency due to the tariff threat – fell by 2.1 per cent at one point.
Mexican peso – which is another currency highly vulnerable to a Trump win – is down by 3 per cent. The USD-JPY extended gains to the highest levels since summer and even the safe-haven assets like Swiss franc and gold are weaker this morning against a broadly stronger US dollar, she said.
Iran's currency also fell on Wednesday to a low on Mr Trump's win, the rial trading at 703,000 to the dollar, AP cited traders in Tehran as saying.
Stock moves
Stocks in Asia rose with Japan's Nkkei leading the charge, up by more than 2.61 per cent. The S&P Asia benchmark rose 0.81 per cent while India's main equities index climbed 1.13 per cent. Equities in Hong Kong, however, slipped with the Heng Seng index dropping 2.23 per cent, while the main stocks gauge in China was marginally down.
US equities are also set to build on gains from Tuesday, with S&P 500 futures advancing 2.19 per cent and Nasdaq Futures climbing 1.54 per cent. The S&P 500 rose 1.23 per cent on Tuesday, while the Nasdaq Composite Index gained 1.43 per cent, and the Dow Jones Industrial Average gauge rose 1.02 per cent.
“US equities have been in buoyant mood over the past few weeks, including on the election day. This is consistent with markets pricing a Trump win,” Daniel Murray, global head of research at EFG Asset Management, said.
Equities in Europe also rose with the FTSE 100 advancing 1.1 per cent, France's CAC 40 Index adding 1.04 per cent and Germany's Dax index rising 0.65 per cent.
Oil falls
Oil prices declined as much as 2 per cent on Wednesday on Mr Trump winning the presidential election, which in turn strengthened the dollar.
Brent, the benchmark for two thirds of the world's oil, was trading 1.34 per cent lower at $74.50 a barrel at 4.20pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was also down 1.36 per cent at $71.01 a barrel.
“Oil prices have been on a falling trend since a while now,” Ms Ozkardeskaya said.
“The weak global economy and sluggish Chinese demand, combined with the green transition have taken a toll on global oil demand prospects while Opec’s production cuts have been countered by increased production elsewhere. The US for example is pumping like there is no tomorrow (and Trump vows to keep it that way).”
