Bitcoin jumps after the attack on Donald Trump. Will the trend last?

The failed assassination attempt on Donald Trump has created a global uproar, making the "Trump trade" a hot topic in recent market discussions. In the wake of the incident, Bitcoin prices surged nearly 10%, briefly nearing the $65,000 mark.

Some are puzzled by the market's reaction, but the reasoning is straightforward: the market believes the chances of Trump winning the election have increased, and Trump has been a vocal supporter of cryptocurrencies. This sentiment has fueled short-term market enthusiasm.

Here are some of Trump's pro-Bitcoin actions:

1. He publicly stated, "I am very positive and open-minded to cryptocurrency companies, and all things related to this new and burgeoning industry."

2. During his presidency, he appointed a former Coinbase vice president as the Comptroller of the Currency and allowed banks and financial institutions to hold cryptocurrencies.

3. His campaign team accepted cryptocurrency donations, a first for major U.S. political parties.

4. He praised Bitcoin mining, expressing a desire for all remaining Bitcoins to be "MADE IN THE USA".

5. He is likely to attend and speak at the 2024 Bitcoin Conference.

In contrast, Joe Biden's administration has imposed strict regulations on cryptocurrencies, creating significant challenges for the industry. It's no wonder the crypto community is eager for Trump's potential return to office.

But can the excitement sustain Bitcoin's upward trend in the long run? Let's delve into Bitcoin's market trajectory.

Since 2020, Bitcoin has seen a bull market in 2020-2021 and a bear market in 2022. In 2024, it surged to an all-time high of $73,000.

However, after the April 20 halving event, Bitcoin entered a period of volatile correction. Here are some reasons why:

1. Miners sold some of their reserves to cover expenses after the halving reduced mining rewards.

2. The bankrupt Mt. Gox exchange is set to release 140,000 Bitcoins starting in July, causing market concerns about increased supply.

3. The U.S. and German governments are selling previously seized Bitcoins.

These factors pushed Bitcoin's price down from over $70,000 to below $60,000. Historically, Bitcoin often experiences a few months of volatility after a halving before a significant rise. With three months already passed since the last halving, could the recent market surge triggered by the Trump assassination attempt signal the start of a new bull market?

To find out, let's look at the positive factors supporting Bitcoin's potential rise.

The second half of the year brings several potential positives that could boost cryptocurrency prices. One major factor is the possibility of Trump winning the election again. Given his track record, a Trump presidency could mean relaxed regulations for cryptocurrencies and possibly a more crypto-friendly U.S. policy. In June, analysts at Standard Chartered suggested that a Trump victory could push Bitcoin prices to $150,000 by year-end.

Aside from the U.S. election, here are other potential positives:

Historically, Federal Reserve interest rate cuts often lead to increases in cryptocurrency prices. Lower interest rates boost market sentiment for risk assets including cryptocurrencies. A looser monetary policy also creates favorable conditions for the financing and development of crypto projects.

Currently, the market expects a high probability of a Fed rate cut in September, with forecasts for multiple cuts within the year. If the Fed announces a rate cut in September, it could provide a significant boost to the crypto market.

The assassination attempt on Trump marks a shift in U.S. political norms and indicates the potential for greater political violence. Additionally, the U.S. election's impact on international stability and the country's high debt levels are causing market concerns. These risks are increasing the demand for Bitcoin, which is increasingly being viewed as a safe-haven asset beyond gold by many investors.

The Ethereum ETF has passed the first stage of approval by the U.S. SEC and is expected to be listed soon. While demand for the Ethereum ETF may not match that of the Bitcoin ETF, it will still bring more capital, liquidity, and demand to Ethereum, potentially boosting its price and positively affecting the entire crypto market.

According to analysts at CryptoQuant, Bitcoin's miner capitulation indicator is nearing levels seen after the 2022 FTX collapse, which could signal a market bottom for Bitcoin.

While these factors may stimulate a rise in Bitcoin prices, it's important to remember that Bitcoin has historically been highly volatile, so don't overlook the risk of a downturn.

For most people, directly purchasing Bitcoin might not be convenient. Here are two alternative ways to participate in the Bitcoin market:

Major cryptocurrency-related stocks in the U.S. market include companies like Coinbase and MicroStrategy. Their stock prices are highly correlated with the cryptocurrency market, though not perfectly aligned.

If you're not familiar with Bitcoin ETFs, you can refer to the article below. It will help you understand the types, costs, and risks associated with Bitcoin ETFs.