Donald Trump, the pro-market and pro-crypto candidate, has won the presidential election, with results continuing to come in as ballots are counted overnight and this morning. US markets are reacting positively to the news, with the mini-S&P 500 futures up over 2%, Nasdaq futures up 1.65%, and Tesla's German Depositary Receipt (GDR) climbing 15.8%. Yields are rising as investors flock to riskier assets, and the US dollar (DXY Index) is up 1.71% at 105.
Among the notable losers, the Mexican peso is down 3%, and the Chinese renminbi is also weakening.
In the crypto markets, Bitcoin has risen nearly 8% in the last 24 hours, Ether is up 8.2%, and meme coins are seeing strong gains, with Dogecoin up 20%.
The cryptocurrency market's volatility spiked overnight, reaching its highest level since April before retreating this morning. The 1-month implied volatility, as shown in the chart, reflects this fluctuation. Similarly, the VIX Index for equity markets is decreasing now that the uncertainty around the election results has passed.
Bitcoin also reached a new all-time high of $75,407, driven by Trump's increasing chances of winning. As shown in the chart, the odds of Trump’s victory (blue line) aligned closely with the rise in Bitcoin's price (red line). On Polymarket, odds for Trump's victory surged above 90% overnight after holding above 60% for much of the previous day.
It’s worth noting that while Polymarket's odds are generally in line with other betting platforms, there have been reports of questionable activity on the platform. According to Fortune Crypto, two analytic firms found that a third of Polymarket’s transaction volume was likely wash trading, meaning a significant portion of the volume could be fake.
Despite a correction observed from Thursday to Monday, where Bitcoin lost more than 8% in a short period, the market sentiment has turned bullish again, fueled by Trump’s improving odds. This correction was initially driven by short-term profit-takers, but it was exacerbated by panic selling. Glassnode data shows that short-term holders incurred a net loss of $2.4 billion during this period, as bitcoins were sold at a loss relative to their acquisition price.
Looking at Bitcoin futures, Coinglass data reveals that nearly $100 million worth of long contracts were liquidated on Sunday and Monday, across major exchanges like Binance, Bybit, and Deribit. While this figure represents a small fraction of the total open interest in Bitcoin futures ($40 billion), it does indicate significant volatility. The correction's intensity this time, though notable, is not as severe as what occurred in early August, when Bitcoin dropped over 7% in a single day.
Interestingly, the "buy the rumor, sell the news" rule did not apply here, as the Bitcoin price has remained above $74,000, signaling strong market support. Bitcoin’s dominance has now surpassed 60%, suggesting that a trend reversal is unlikely in the short term.
Looking at Ethereum, the ETH/BTC pair is currently at a 3-year low, but Ether is still performing well on its own. The price of Ether is breaking resistance levels, now above $2,600. Ethereum is also making strides in adoption, with the Michigan State Pension Fund investing $10 million in the Grayscale Ethereum ETF, and UBS launching a tokenized money-market fund on Ethereum.
Trump's potential impact on the crypto industry is significant. He has promised to keep 100% of all Bitcoin held by the US government and to create a Bitcoin and crypto presidential advisory council. He has also pledged to fire SEC Chairman Gary Gensler and focus on policies that benefit the crypto sector, particularly in terms of US-based mining.
With Trump’s victory confirmed, the outlook for the crypto sector is highly optimistic, with hopes for a new bull cycle to start before the year’s end, potentially leading to a "crypto summer" this winter.
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