​Cryptocurrencies keep dominating market news with staggering gains over the past weeks. Ever since Trump won the election in November 2024, cryptocurrencies kept soaring. Trump has been a strong supporter of cryptocurrencies during his race. Unsurprisingly, when he won, optimism about the asset class increased significantly. Enthusiasm increased due to the prospect of finally clear regulation around cryptocurrencies in the US. Under Trump’s administration, he wants to avoid that the US becomes irrelevant for such a promising industry, which is frequently compared to the early tech industry – of which the US is the major hub in the world through strong support during the development of the industry. Additionally, Trump suggested a large Bitcoin reserve, which naturally pushes the price of Bitcoin. He is also filling his departments with strong cryptocurrency advocates to place the US as market leader in the blockchain technology. One of his latest moves is replacing Gary Gensler with Paul Atkins as chair of the SEC. This will likely result in further institutional support, as the asset class matures and clearer regulations are in sight. Institutional adoption is already on the rise with Australia’s AMP adding Bitcoin to its portfolio. Similarly, Ray Dalio and BlackRock are also pushing for the asset class. The previously mentioned factors led Bitcoin to soar from around $60k-$70k prior to Trump’s election to above $100k within slightly more than one month. Inflows in Bitcoin ETFs in November and December also topped the inflows after the initial approval of the first Bitcoin ETFs in the US. As of the time of writing, Bitcoin is trading at $101k with a performance of 140% in 2024. Figure 1 also highlights the steep growth in the past month.

​Cryptocurrencies have exploded in price since Trump's victory. Prior to the election day, Bitcoin hovered between $60k and $70k. Since then, Bitcoin has narrowly missed the $100k on its latest rally. Bitcoin reached a new record high of $99.6k and has since fallen back to $91k. At the time of writing, Bitcoin has risen 37% since Trump was elected for office. With these new highs, Bitcoin nearly reached a market capitalization of $2tn. Figure 1 shows the price and market capitalization of Bitcoin since 2020 and its recent surge. Optimism in the cryptocurrency space increased significantly when Trump was elected to office. He highlighted plans for a government reserve in Bitcoin, progress on cryptocurrency regulation and the replacement of Gary Gensler as chair of the SEC. Gensler has shown a strong tendency against cryptocurrencies and is likely replaced by a person significantly more positive on cryptocurrencies.

​There is no doubt that the US election has had a significant impact on market performance since last week. President-elect Trump achieved a decisive victory, including a win in the popular vote. Furthermore, the Republican Party also secured victories in both the House of Representatives and the Senate. This should facilitate the implementation of the majority of the planned changes. Following the confirmation of Trump as the winner, equities began to rally. While there was already a change in equity sentiment following the first rate cut by the Fed, confidence continued to grow when Trump emerged victorious. The conclusion of the US election in a relatively smooth process undoubtedly had a part to play. This has led to a reduction in uncertainty in global markets. The second significant factor is the election of Trump as President. Investors are confident that the new administration will make financial markets a priority, as was the case in his first term. As a result, the S&P 500 reached a new record high of 6,000 points for the first time. The Nasdaq reached a new milestone, surpassing the 19,000 mark for the first time. In the commodities market, this had the opposite effect. Gold, a traditional asset used to manage uncertainty, saw a decline from its previous highs. In the context of a bullish market sentiment, gold is perceived as a less attractive investment. Investors are inclined to hold risk-on assets with higher potential returns, as opposed to gold, which is used to mitigate risk. The price of gold fell from $2,700 to $2,550 over the past week. Crude oil initially gained, but soon began to decline. The Republican agenda supports fossil fuels and is likely to push the industry forward. This is likely to result in more supply and overall lower prices. WTI crude oil declined from $71 per barrel to $68. Lastly, the big winner from the US election result is the cryptocurrency market. Trump's campaign trail agenda was notably pro-crypto, with a particular emphasis on the potential for the US government to establish a Bitcoin reserve. It should also result in a clear regulation of cryptocurrencies during his tenure. This prospect prompted a surge in Bitcoin’s price, reaching a new record high of $93k. The subsequent 45% rally in slightly more than a week triggered another bull run in the cryptocurrency market, with Ethereum not far behind with gains of 38% in a single week. Figure 1 illustrates the price development since October 2024 and the impact of Trump as US President Elect.

​With less than a week to go, the US election is fast approaching. The decision is likely to have a major impact on the world and financial markets. Both candidates are drumming up support wherever they can. With less than a week to go, no candidate has emerged as the clear winner. Instead, the race is very close and will be decided by the swing states, where the candidates are also very close. Interestingly, current Vice President Harris is leading the national polls, while ex-President Trump is leading the betting sites. Trump has also managed to regain a lot of ground after it looked like he was going to lose badly to Harris shortly after she entered the race. Although there is no clear winner yet, the race is currently boosting financial markets.
In particular, equities have resumed their rally after a weak summer and are back at record highs. Other factors, such as the hype around AI and strong earnings, particularly from technology companies, strongly supported the rally. More recently, the Fed's larger-than-expected rate cut has been a major contributor to the strong year for equities. On average, US election years also tend to be positive for equities. The technology-heavy S&P 500 and Nasdaq indices both rose by more than 20% for the year. The Dow Jones was up 15%, but has fallen back slightly and is currently up 12%. Small caps have struggled in the early part of the year, unable to match the gains of large caps. Nevertheless, the Russell 2000 Index is also up 10% before the latest surge. Figure 1 shows a comparison of the above indices through 2024.