For all those who are casual market investors, rejoice! Bitcoin is back to its winning ways as the world’s leading free-market digital currency surges on Tuesday against a weakening US dollar due to recent commentary from President-elect Donald Trump.
Trump: Dollar ‘Too Strong’
There are many potential factors in the value Bitcoin versus the dollar, the primary one being the value of the dollar itself, which is usually very stable and strong, being the global reserve currency. However, with Donald Trump ready to assume the position of the most powerful man on Earth in just three days, his influence cannot be understated, and he says the dollar is already “too strong.”
The market responded to this with a surge in gold and bitcoin prices. Gold jumped almost $20 USD while Bitcoin, coming off a major bubble burst, gained over 6% in just a few hours, approaching $890 USD. Obviously, the weaker dollar increases dollar prices for commodities and other goods.
“The dollar is the guiding light at this point and all eyes are on the shape U.S. policy will take,” said Fredrik Nerbrand, global head of asset allocation at HSBC Holdings Plc, to Bloomberg. “I would put today’s dollar weakness down to noise rather than a structural shift. If Trump wants to become as growth-generative as he’s planning to be and you don’t have the same fiscal push coming from the rest of the world, then it’s a question of where does the capital flow to. The dollar is the tallest pygmy.”
This Trend May Reverse Sooner Than Later
Some economists are saying that this trend may reverse significantly over the first year or so of a Trump administration, however, with an even stronger dollar than today, which would keep Bitcoin prices in check.
“I see a likelihood for a major clash developing in the next year, year and half, between the Trump administration’s desire to go for 3 to 4 percent growth and the growing attention of the Fed to emerging inflation in their own 2 percent mandate,” Northwestern University’s Robert J. Gordon told a conference in Paris on Monday.
In conclusion, Bitcoin values over the last month have returned to pre-bubble levels, as they did after the Mt. Gox bubble in January 2014. The difference is it took the Bitcoin market less than a month to recover instead of a year, previously.
Now, Bitcoin has resumed its normally scheduled ascent. January is always a turbulent month for Bitcoin and this year has proven no different. We’ll keep you informed.
Do you see Bitcoin continuing this current climb into the Trump era? Share your thoughts below!
Images courtesy of Shutterstock, coinmarketcap.comShow comments