SuperEx丨What is the “Trump” trade? Why it’s blowing up the market？

superex · October 30

#SuperEx #Trump #market

The “Trump trade” does not refer to a single trading action directly associated with the traditional political figure Trump, but is a collective term for a series of trading strategies in the cryptocurrency market triggered by a series of events, expectations, and market reactions related to Trump.

As an influential political figure, Trump’s policy positions, statements, and political actions can significantly impact the global economy and financial markets. The cryptocurrency market, being highly sensitive and innovative, often reacts more swiftly and intensely to external factors.

Currently, with the U.S. elections approaching, over 41 million voters across the country have already cast early ballots for the 2024 presidential election. As a result, the cryptocurrency market has been experiencing increased volatility. Stimulated by “election trading,” Bitcoin has initiated a rally, reclaiming the long-awaited $71,000 mark this week, while the crypto sector has generally seen upward movement, with the MEME market particularly immersed in the wave of AI + Meme.

Returning to the two candidates, the competition between Harris and Trump has become increasingly fierce, focusing on the methods and channels for revitalizing the American economy. Trump’s campaign platform includes policies such as tax cuts, infrastructure investment, and trade protectionism, which are expected to stimulate economic growth and increase employment in the short term. These policy expectations have ignited market enthusiasm before the elections, as investors hope that the “Trump trade” will bring new growth momentum to the market in 2024.

In particular, Trump’s policies could impact geopolitics and trade relations. If Trump is elected, the U.S. may reassess its trade policies toward China, the European Union, and Middle Eastern countries, creating uncertainty that intensifies the market’s demand for safe-haven assets. At the same time, some investors are betting on safe-haven assets like gold and cryptocurrencies, anticipating that Trump’s election could lead to increased market volatility.

Thus, we can observe the fierce rally in the cryptocurrency market led by BTC, while the price of traditional safe-haven asset gold continues to break new highs.

Let’s return to the crypto space

Unlike traditional financial assets, the cryptocurrency market is also under significant scrutiny in this “Trump trade.” Trump has taken a stringent stance on digital currencies, previously stating that he would strengthen regulations on cryptocurrencies. Some analysts believe that if Trump is elected, he may introduce stricter cryptocurrency regulations, particularly targeting the DeFi and stablecoin sectors.

This expectation has caused considerable fluctuations in cryptocurrency market sentiment. Some investors have chosen to sell high-risk crypto assets ahead of the elections, increasing their holdings in stablecoins to mitigate potential policy shocks.

Copper analysts have pointed out that the market may be at a temporary peak before the U.S. elections. Based on on-chain data from Bitcoin, 98% of short-term holders’ wallet addresses are currently in profit. Historically, when this percentage rises significantly, investors tend to lock in profits, often leading to rapid selling pressure. It is expected that the market’s trend will only become clear one week after the U.S. elections, as primary investors typically avoid large-scale investments around the time of the elections to mitigate risks.

Of course, the positive impacts must also be acknowledged. The Trump trade has introduced a new “market segment” — politically themed cryptocurrencies. The emergence of such investment themes signifies further segmentation in the crypto market. For many investors, beyond traditional metrics like market capitalization and use cases, they are also beginning to focus on the topics and attention behind the assets. The political-themed cryptocurrencies triggered by the Trump effect provide investors with new investment strategies, and similar politically influenced events may continue to drive the differentiation and development of the cryptocurrency market in the future.

This cross-border effect has built a bridge between traditional financial markets and the cryptocurrency market. The decentralized and free nature of the cryptocurrency market is gradually attracting more attention from traditional investors and institutions, blurring the lines between the two.

At the same time, in terms of innovation, the policies of the Trump administration may provide certain opportunities for technological innovation in the cryptocurrency market. For example, blockchain technology, as the underlying technology of cryptocurrencies, has immense application potential in supply chain management, financial services, and other areas. Support from the Trump administration for fintech may promote the development of blockchain technology, thereby driving innovation in the cryptocurrency market.

The phenomenon of the Trump trade being all the rage is not merely a fleeting market trend, but a reflection of the thematic and politicized trends in the cryptocurrency market. As the crypto market gradually permeates various aspects of the global political economy, we may see more hotspot events similar to the “Trump trade” in the future. For investors, capturing emotional effects and focusing on topical assets will become a new way to gain returns in the cryptocurrency market. However, in the face of the high volatility and regulatory risks associated with topical trading, rational investment and in-depth research remain effective strategies to navigate market changes.