Bitcoin Rally Extends Beyond Trump Win

After Trump’s decisive win on 6th November, most eyes turned toward the rise of U.S. stocks, Bitcoin, the U.S. Dollar, and bond yields. Interestingly, Bitcoin, the U.S. Dollar, and yields started trending higher as early as September, more than a month before the election.

On 18th September, the Federal Reserve cut interest rates for the first time since beginning its rate hikes 2.5 years earlier. Strangely, this rate cut triggered an upward trend in:

• Dollar
• All Yields or lending rates
• Bitcoin

I anticipate that yields and Bitcoin may continue to show strength, while the Dollar could experience heightened volatility

Bitcoin as an Inflation Hedge Asset 

Both gold and Bitcoin responded strongly when inflation peaked at 9% in June 2022. On 15th November, Jerome Powell stated that the Fed does not need to “rush” to reduce interest rates, implying that rates may remain elevated for a longer period. As long as inflation concerns persist, these inflation hedge assets are likely to stay resilient.

Trading Strategies for Bitcoin

If Bitcoin closes above its key resistance level around 80,000 by the end of this year, it could indicate the formation of a potential support channel moving forward. By projecting the upper band forward, traders can use it as a guideline for future support levels and take advantage of buying opportunities during price dips. 

Since Bitcoin has a relatively short history, a case study on gold can offer insights on how to draw support lines and parallel channels. Essentially, once we identify its uptrend line in relation to market troughs, its former resistance can become support once it is tested.

Bitcoin Rally with Trump Win

During Trump’s campaign, many investors viewed his administration as crypto-friendly. However, beyond sentiment, the intrinsic value of most cryptocurrencies is fundamentally linked to blockchain technology. Personally, I have more faith in the underlying blockchain technology than in the cryptocurrencies themselves.

Can the intrinsic value of most cryptocurrencies be accurately calculated? I’d love to hear your thoughts on this.

For more insights on formulating trendlines and parallel channels, check out this video.

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