Market Optimism with Trump’s Election
With Donald Trump assuming the role of the next U.S. president, market sentiments have shifted positively. Experts are now predicting that Bitcoin may surpass significant milestones by 2025. Meanwhile, analysts at JPMorgan have painted a promising picture for both gold and Bitcoin, highlighting the investment strategy known as the “debasement trade.” This approach benefits from currency devaluation, often resulting from inflationary and fiscal policies that expand economic activity.
Understanding the Debasement Trade
The “debasement trade” thrives on the devaluation of currency, a consequence of expansionary fiscal measures and inflationary policies. Investors tend to gravitate towards assets like gold and Bitcoin, which are perceived as reliable stores of value, retaining their worth even as currency purchasing power wanes. A recent JPMorgan report emphasizes that this strategy is poised to gain further traction, bolstered by tariffs, geopolitical tensions, and expansionary fiscal policies, commonly referred to as “debt debasement.”
Despite an initial negative market response from gold, the analysts assert that this does not signify a rejection of the debasement trade. Bitcoin, a key component of this strategy, experienced a rally following Trump’s election victory, signaling confidence in this investment approach.
Bitcoin’s Meteoric Rise Post-Election
Following the confirmation of Trump’s victory, Bitcoin surged to a historic high of $76,244, currently trading at $74,847. Analysts maintain a positive outlook for Bitcoin as we approach 2025, anticipating continued growth and resilience.
Gold and Bitcoin Prices Are Expected to Rise
The pace at which central banks acquire gold will play a pivotal role in shaping its price trajectory through 2025. In 2022, central banks significantly increased their gold holdings following the Ukraine conflict and the imposition of sanctions on Russia. Although the People’s Bank of China paused its gold purchases last April, ongoing geopolitical tensions and tariffs are expected to encourage central banks, including the PBoC, to diversify away from the dollar and increase their gold reserves.
Retail investors have also shown a growing interest in gold and Bitcoin ETFs since last summer. This trend is expected to persist into 2025, with Trump’s policies likely to support the growth of both assets.
Microstrategy’s 21/21 Plan To Boost BTC
Another factor poised to bolster Bitcoin’s price is Microstrategy’s ambitious Bitcoin acquisition plan. This strategy involves raising $42 billion in capital over the next three years, with $21 billion sourced from equity and another $21 billion from fixed-income securities. Analysts project that MicroStrategy will invest $10 billion into Bitcoin for 2025 alone, matching its cumulative purchases since mid-2020.
Trump’s victory has triggered a significant rally in the stock and cryptocurrency markets, as well as a rise in the value of the U.S. dollar. As Trump had promised during his campaigns, the crypto industry eagerly anticipates regulatory easing, positioning the U.S. as a potential hub for digital assets and innovation.
