(Nov 18): Bitcoin posted its biggest two-day retreat over the weekend since the US election amid a bout of caution in global markets, as traders assess the potential impact of President-elect Donald Trump’s policy agenda.
The digital asset fell almost 3% across Saturday and Sunday, before paring some of the drop to change hands at US$90,100 (RM402,355) as of 9:05am on Monday in Singapore. Among uncertainties are Trump’s timetable for delivering on his pro-crypto pledges and whether all are feasible, such as setting up a US bitcoin stockpile.
In the US stock market, euphoria over Trump’s business-friendly stance is being tempered by inflation risks from the prospect of trade tariffs and deficit-spending to fund tax cuts. Investors are scaling back expectations for Federal Reserve interest-rate cuts in a solid US economy, a possible obstacle for crypto since liquidity conditions can influence speculative demand for digital tokens.
Bitcoin became “overheated” after a record-breaking advance since Election Day on Nov 5, and “a lot of good news has been built into the price,” IG Australia Pty Ltd market analyst Tony Sycamore wrote in a note.
Trump has pledged to create a friendly regulatory framework for crypto, set up a strategic bitcoin stockpile and make the US the global hub for the industry. A onetime crypto skeptic, the president-elect changed tack after digital-asset firms spent heavily during election, campaigning to promote their interests.
Crypto legislation may be approved soon under a Trump administration, spurring a shift away from regulation by enforcement to a more collaborative approach, JPMorgan Chase & Co strategists, led by Nikolaos Panigirtzoglou, wrote in a note.
Banks could enjoy greater scope to engage with digital assets, the team said, and markets are more hopeful of approval for crypto exchange-traded funds (ETFs) investing in tokens other than just the top two, bitcoin and ether.
Regulatory clarity would be a tailwind for venture capital investing, mergers and acquisitions and initial public offerings, according to the strategists. But the establishment of a US bitcoin reserve is a “low-probability event,” they added.
US ETFs investing directly in bitcoin attracted a net inflow of US$4.7 billion from Nov 6 to Nov 13, the day the original cryptocurrency set an all-time peak, based on data compiled by Bloomberg. But about US$771 million exited the products over Thursday and Friday.
Uploaded by Liza Shireen Koshy