Bitcoin soars to record high amid expectations of crypto-friendly Trump administration
The US dollar fell to the one-week low on November 20 as it continued on a three-day losing streak. It is down from its highest level, due to a frenzy ensued days after the election of Donald Trump. The dollar index dropped to the lowest level since November 13 against six competitor currencies slipping to 106.07 from 106.12. By 0247 GMT it was 106.18, lower than its high of 107.07 recorded on November 14.
This decline is the result of the market reconsidering the “Trump Trade.” Initially, the hope of greater fiscal expenditure, tariffs and strict immigration laws boosted the greenback. Economists are convinced that these steps may lead to inflation and slow Federal Reserve easing. However, people are beginning to question Trump’s ability to select a capable cabinet given some of the choices that have been named have limited experience
According to a Reuters report, a DBS strategist said, “The 'Trump Trade' that boosted the greenback is facing challenges from Trump's controversial cabinet nominations and the escalation in the Russian-Ukraine war,” They also noted that the dollar’s long-term prospects rest on firm economic data and the likelihood that the Fed will slow rate cuts in 2025.
Market tension emerged further after Russia’s foreign minister said he would work to ensure no nuclear war happens. This pledge prompted the Moscow announcement to lower the nuclear strike trigger level, which had a brief temporary effect on safe-haven currencies like the yen. The dollar appeared to have strengthened slightly after a steep decline against the yen having reached a low of 153.28 on November 19, the currency was at 154.84 yen, up 0.9 per cent.
The dollar is also influenced by the federal policy. Expectations of a December rate cut decreased to 57.3 per cent from 58.7 per cent the previous day, based on the CME’s FedWatch Tool. A month ago, expectations were at 76.8%. Fed Chair Jerome Powell recently stated, "The economy is not sending any signals that we need to be in a hurry to lower rates."
The euro steadied at $1.0598, recovering from $1.0524 after a one-week low in the previous session. Meanwhile, Bitcoin surged to a record high as its value reached an all-time high of $94,078.22 before stabilizing slightly above $91,954. Trump’s regime was expected to be friendly toward cryptocurrencies which contributed to the rally. Reports from The Financial Times revealed that Trump’s social media company is planning to acquire crypto trading firm Bakkt.
Based on these changes, the investors are still careful. Yet for the dollar, its trajectory will probably depend on fiscal policy’s guidance, geo-political events and indicators from the Federal Reserve.