1 min readAfter a decisive victory by President-elect Trump, crypto markets have responded positively.
This reflects optimism about a pro-crypto administration. We can continue to expect increased trading volumes and ETF flows in the post-election landscape, with net inflows exceeding US$24bn year-to-date despite seeing US$ -3.7m in outflows in the past week, likely due to a combination of de-risking and profit taking around the election.
Potential changes in personnel and legislation could pave the way for Bitcoin to be accumulated as a strategic reserve asset, offering a favourable hedge against monetary and fiscal debasement. This environment may also allow crypto firms to operate more freely and eventually open up the IPO market for potential listings on U.S. exchanges. However, it’s important to note that these changes will take time as we await clarity on the composition of the Trump administration.
On the macro front, the U.S. economy remains robust, with the ISM Services PMI coming in above expectations at 56, compared to an anticipated 53.8. However, the dollar index continues to strengthen reaching 105 on the DXY alongside rising treasury yields, particularly at the long end of the curve.
The FED faces a complex path ahead, grappling with concerns over increased government spending, a resurgence in inflation and a deteriorating labour market in 2025. With this in mind, they are likely to remain data-dependent to allow them to adjust monetary policy to adverse changes in the economic outlook.
