Trump Boosts Bitcoin Investment Momentum

CRYPTO
Trump Boosts Bitcoin Investment Momentum

The Bitcoin-friendly Trump administration, coupled with expanding statehouse lobbying, could usher in a significant shift in public pension funds and treasuries investing in cryptocurrency. President-elect Donald Trump’s administration, known for its favorable stance on Bitcoin, aligns with growing efforts at the state level to make crypto more accessible and integrated into government operations.

Supporters of Bitcoin view it as a hedge against inflation, likening it to gold. Many enthusiasts argue that as governments and institutions increase their adoption, Bitcoin’s price volatility will stabilize, enhancing its legitimacy and boosting investor confidence. However, critics caution against its speculative nature, emphasizing the risks of high volatility and uncertain future returns.

While public pension funds remain cautious, with only a few dabbling in crypto, landmark developments like Bitcoin hitting $100,000 and the U.S. Securities and Exchange Commission approving Bitcoin exchange-traded funds have heightened interest. Efforts in states like Pennsylvania and Wisconsin indicate growing momentum, though skepticism persists among traditional investment professionals who prioritize stability and long-term returns.

As federal and state governments explore new crypto-friendly legislation, Bitcoin's role in public investments may expand, but cautious optimism and education remain vital in navigating this uncharted territory.

FINANCE
Fed Signals Slower Rate Cuts

Federal Reserve officials are signaling a cautious approach to interest rate cuts as President-elect Donald Trump prepares to take office. While economists anticipate a third rate cut in January, many Fed officials suggest it may be time to slow the pace due to persistent inflation and uncertainty around Trump’s proposed policies, such as tariffs.

The Fed has already cut rates twice this year, reducing its benchmark rate by a full percentage point since September. A Reuters poll shows most economists expect a pause in rate cuts after January to assess economic conditions and the impact of Trump’s fiscal plans.

Fed Governor Michelle Bowman, along with other officials, has emphasized the need for prudence, highlighting risks in cutting rates too aggressively. Experts believe Trump’s proposed tariffs and fiscal changes could significantly impact inflation and the Fed’s trajectory. Some, like Chicago Fed President Austan Goolsbee, predict rates could drop further if conditions worsen.

CRYPTO
BTC Soars Amid Rate Cut Speculation

Bitcoin (BTC) surged to a new all-time high of $106,500 before retreating to $104,500, as traders brace for a potential "hawkish rate cut" from the Federal Reserve. The Fed is widely expected to reduce its benchmark rate by 25 basis points, bringing it to a range of 4.25% to 4.5%, while signaling a more cautious approach to future cuts in 2024.

Market participants anticipate that the Fed's updated dot plot and economic projections will reflect slower easing, aligning with signs of a stronger-than-expected U.S. economy and persistent inflation volatility. Such a scenario could increase Treasury yields and strengthen the U.S. dollar, potentially pressuring Bitcoin and other risk assets.

Despite the cautious outlook, analysts highlight favorable seasonal trends and regulatory optimism under President-elect Trump as bullish factors for Bitcoin. Additionally, global central bank easing, particularly from China, is expected to sustain BTC’s upward trajectory despite short-term volatility.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.