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Trump Re-Election Momentum Fuels Cryptocurrencies: ETFs Spotlight
Despite the recent volatility, the outlook for cryptocurrencies remains optimistic. Bitcoin prices have risen about 9% since the assassination attempt on Donald Trump that left him injured. Trump, who has been a cryptocurrency advocate, seems likely to return to office for a second term as US President after the incident.
Coupled with the growing likelihood of the Fed cutting interest rates later this year and the approval of spot Ether ETFs, this scenario creates opportunities in digital currencies.
What Does Trump’s Election Victory Mean for Cryptocurrencies?
According to Polymarket, cited by Forbes, the assassination attempt has increased Trump’s chances of winning the presidential election to 70%, while President Biden’s chances of re-election have dropped to 16%.
Donald Trump, who has started accepting cryptocurrency donations for his campaign, has positioned himself as crypto-friendly, criticizing Democrats’ efforts to regulate the cryptocurrency industry on multiple occasions. Trump, who is scheduled to speak at the Bitcoin 2024 conference in late July, is also acting as a tailwind for the cryptocurrency market.
According to Yahoo Finance, Trump’s meeting with Bitcoin miners in June and his stance on ensuring that all remaining Bitcoin is mined in the United States make his possible election victory a major catalyst for the volatile cryptocurrency market.
Trump’s second presidential term promises not only a potential surge in digital asset prices, but also paves the way for clearer regulations and greater acceptability.
Fed Rate Cut to Raise Prices
The increasing likelihood that the Fed will start cutting interest rates in September this year, coupled with de-dollarization, tends to create more opportunities in digital currencies. Investors may see Bitcoin as an alternative to the depreciating dollar, which moves inversely to the Fed’s interest rate adjustments.
According to the CME FedWatch Tool, the Fed could start cutting interest rates in September of this year, with an 89.9% probability that they will drop to 5-5.25%. The likelihood of a further interest rate decrease becomes more evident towards December, with rates potentially dropping to 4.75-5%, supported by a 38.7% probability. Interest rates could see a further decline, dropping to 4.5-4.75%, with a 52.6% probability supporting this estimate.
Furthermore, a possible rate cut by the Fed would increase risk appetite, which, in turn, would help cryptocurrency prices.
Other Factors Boosting the Cryptocurrency Market
With the launch date pushed back to mid-July or even late July, the approval of spot Ether ETFs marks a pivotal moment in the cryptocurrency landscape that is set to impact both the broader market and Ethereum in particular (read: Is It Time to Buy Ether ETFs Ahead of Approval Resumption?)
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Favorable shifts in the digital currency’s supply-demand dynamics also increase the likelihood of a price surge in the asset. With the cryptocurrency’s supply having shrunk by 50% since its halving in April, we could see more inflows into cryptocurrency ETFs in the coming months. Historical trends further support a favorable outlook for the cryptocurrency market (read: Is a $500K Bitcoin Rally Possible? Cryptocurrency ETFs to Consider).
ETFs to Consider
Below, we mention some ETFs that allow investors to increase their portfolio exposure to digital currencies and benefit from their long-term uptrend.
We can gauge the potential impact of a Trump election victory on digital asset prices by examining the performance of the following funds during the pre-market hours following the attempted assassination of Trump last Saturday.
Registered iShares Bitcoin Trust (IBITS) gained 8.28% during pre-market hours on June 15.
Grayscale Bitcoin Confidence (GBTC) gained 8.37% during pre-market hours on June 15.
Fidelity Wise Origin Bitcoin Fund (FBTC) gained 8.49% during pre-market hours on June 15.
Bitcoin ETF ARK 21Shares (ARKB) gained 8.56% during pre-market hours on June 15.
Bitwise Bitcoin ETF Trust (BITB) gained 8.31% during pre-market hours on June 15.
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Grayscale Bitcoin Trust ETF (GBTC): ETF Research Reports
iShares Bitcoin Trust (IBIT): ETF Research Reports
Fidelity Wise Origin Bitcoin Fund (FBTC): ETF Research Reports
ARK 21Shares Bitcoin ETF (ARKB): ETF Research Reports
Bitwise Bitcoin ETF (BITB): ETF Research Reports