As the FED pivot becomes clearer for the start of the school year and the probability of Donald Trump winning the November 5 presidential election has increased, which financial assets could benefit the most from this Trump/FED pivot combination, and is Bitcoin one of them?
Fed Pivot and Potential Trump Victory, a Winning Combo for Bitcoin
Asset Classes : the effects of the combination of Donald Trump's (potential) victory in the presidential election and the FED's pivot (a succession of rate cuts for the end of 2024 and especially 2025) will depend on several factors and there will be losers and winners among the different asset classes.
S&P 500 : The effect will depend on the degree of trade war, because the tariffs wanted by Trump can represent a constraint for the US economy, the perverse effects of the all-out trade war can create negative effects, at least in the initial phase. Indeed, the US's trading partners can take retaliatory measures that can have negative consequences on US exports.
The reason for the FED pivot will be key to the evolution of the US stock market and the cryptocurrency market. If the pivot occurs for the right reason (disinflation), then the effect will be bullish. If the pivot occurs for the wrong reason (rising unemployment), then the effect will be bearish via lower corporate profits.
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Naturally, this is bullish for bonds because of the inverse correlation between bond prices and the market interest rate cycle, and the price of Bitcoin also obeys this correlation.
Regarding the US dollar, a bearish effect is expected due to the FED pivot and the desire of the Trump/Vance duo to reduce the US trade deficit (trade war with China in particular) via a comparative advantage in the exchange rate.
For Bitcoin, a bullish effect due to the inverse correlation with the dollar and market interest rates which will decline with the FED pivotThe Trump administration has previously implemented deregulation in the financial sector, which could continue into a second term and support banking stocks in particular and financial market activities, including cryptocurrencies.
There is a desire among Republicans to bring most of the crypto industry, including mining activities, and financial flows to Bitcoin spot ETFs to the United States. Trump had previously declared that not a single Bitcoin should be mined outside the United States.
Donald Trump and Jerome Powell, the head of the Fed
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BTC: $65,000 resistance must be broken to continue the rebound
The Bitcoin price has been in a bullish recovery since the reintegration of the 200-day moving averages (simple and exponential). The technical structure of the recovery is all the more interesting as it was preceded by bullish price/momentum/participation divergences.
On the other hand, a bullish gap has been opened on the futures contract between $58,000 and $60,000, it would be possible that its filling is necessary before going higher. In January, it was necessary to fill the bullish gap of $39,000 with a 3-week correction after the validation of the BTC spot ETFs before the rise resumed.
In any case, the major resistance at $65,000 must be crossed to consider returning to contact with the historic record.
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BTC/USD chart showing Japanese candlesticks in daily data
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Vincent Ganne is a recognized expert in technical analysis with 18 years of experience. He frequently appears on BFM Business and produces exclusive analyses for Cryptoast Research. With his extensive experience, Vincent offers a global approach to financial markets, taking into account macroeconomic events and using many aspects of graphical analysis to forecast the trends of Bitcoin and other cryptocurrencies in the medium and long term. He also held the position of Senior Market Analyst & Business Development Manager for 3 years at TradingView, thus reinforcing his in-depth knowledge of financial markets.
Vincent Ganne
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