The cryptocurrency Bitcoin hovered around USD 94,000, riding a wave of excitement following Donald Trump’s election as the 47th United States president and anticipations that his administration would be crypto-friendly.
With a gain of over 25% since November 5, the largest cryptocurrency in the world has become one of the most noticeable movements in the week following the election.
It is increasing alongside Elon Musk’s Tesla, an automaker that has experienced nearly a 40% rise since the election results, as investors believe that Donald Trump’s supporters and interests will thrive during his time in office.
“Obviously (it’s) a clear Trump trade as he is so supportive of the industry, and this can only mean more demand both for crypto stocks as well as the currencies themselves. The fact that Bitcoin was trading near all-time highs when the election result came through meant that it had a clean sky above,” Nick Twidale, chief market analyst at ATFX Global in Sydney said.
Donald Trump embraced digital assets during his campaign, vowing to build a national Bitcoin stockpile and turn the United States into the “crypto capital of the planet.”
Although it’s unclear how or when that might occur, the prospect sparked a wild spike in cryptocurrency mining and stock trading.
“I think it increases the chances that other nation states buy Bitcoin in a bid to front-run the US. Additionally, I think it would be a crazy catalyst for the US-listed Bitcoin miners…given possibilities of such entities getting nationalised,” Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital said.
Overnight on Wall Street, cryptocurrency miner Riot Platforms surged by almost 17%, and it continued to rise in after-hours trading. CleanSpark and fellow miners MARA Holdings saw a nearly 30% increase.
Between October 31 and November 10, MicroStrategy, a software company and Bitcoin investor, revealed that it had purchased roughly USD 2 billion.
However, short sellers of cryptocurrency and blockchain-related stocks have suffered heavy losses since November 6, after Bitcoin surged to record highs. Crypto short trades looked set for a further hammering on November 11 as most cryptocurrency-related stocks jumped in US premarket trading. Among them, Coinbase was last up close to 16%, tracking the surge in Bitcoin prices.
Traders who bet against MicroStrategy, one of Bitcoin’s biggest corporate backers, lost more than USD 1.2 billion between November 6-8, according to data analytics firm Ortex, and are down more than USD 6 billion so far in 2024.
Combined short-selling losses on crypto-exchange operator Coinbase Global, crypto miners Riot Platforms and MARA Holdings, and blockchain-farm operator Bitfarms were about USD 1.2 billion, as of the November 8 close.
“Bitcoin speculators are betting on a more clement regulatory environment and have expectations that the authorities may build up a reserve crypto fund, helping lift ongoing demand,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown, while interacting with Reuters.
Investors betting against iShares Bitcoin Trust exchange-traded funds, the world’s largest ETF in terms of assets under management, lost close to USD 7 million since November 6.