4 min readBitcoin has eased back from record highs on Wednesday as optimism surrounding Donald Trump’s victory in the US presidential elections appears to be cooling and as the focus turns to upcoming US inflation data.
Bitcoin rose to a record high of almost 90,000 this week as cryptos enjoyed a week-long rally following Trump’s win over Kamala Harris in the US elections.
Trump had pledged to make America the crypto capital of the world and even spoke of a national Bitcoin reserve. His pro-crypto stance across the campaign and expectations of deregulation once he takes office come at a time when institutional demand for Bitcoin is soaring, paving the way for strong gains. Trump is also expected to implement expansionary and inflationary policies, which could also underpin Bitcoin demand over the long term.
US inflation data
Attention is now coming back to U.S. economic data and the Federal Reserve. US inflation data is due later today and is expected to show that inflation remained sticky in October, rising to 2.6% annually from 2.4%. Core inflation is also likely to stay at 3.3%. Hotter-than-expected inflation could see the market rein in December rate cut expectations. Currently, the market is pricing in a 60% chance of a 25 basis point rate cut in December, down from 80% just before the election last week. A lower interest rate environment is more beneficial for riskier assets as it improves liquidity. Therefore, hotter-than-expected inflation data today could put some pressure on risk assets such as Bitcoin.
DOGE rises to a 3-year high
Dogecoin, which has been a major beneficiary of Trump’s election victory, surging almost 100% since last Thursday, is extending gains for a sixth straight day after Trump confirmed that Elon Musk and Ramaswamy will lead the DOGE (Department of Government Efficiency Agency). Trump made the announcement for the agency, which aims to reduce bureaucracy and unnecessary regulations to curb government spending.
Elon Musk had floated the idea of DOGE department prior to the election. Investors immediately drew the link between DOGE the department and the meme coin, a coin that Musk has been a champion of since its start and which Musk has been closely tied to its price action. However, it’s unclear yet whether the taken will be used in any official capacity. Should that be the case, DOGE could surge to fresh record highs.
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