US equity markets rallied overnight in one of the most powerful market spikes in years – after being beaten down in October and the beginning of November – while Bitcoin, trading lower by 35% in the past 7 days, rallied to add $20 billion to its market cap. These types of moves are shockingly aggressive and prove that the US economy, the Trump economy is far more resilient than many people think.
The Bitcoin rally of 15% overnight is telling investors that, despite the recent sell-off of 35% in 7 days and the fall from the highs of near $20,000 over the past year, down 82%, investors are focused on “long-term profits and investments” and are willing to take short-term pain if necessary. This implies that buy and hold investing in cryptocurrencies is here to stay. But why?
Well in our view, the fact that Bitcoin is moving from a Wild Wild West and individual investor market to a market that encourages institutional investing by long-term funds (again, with the support of US, Japanese and Swiss regulators), means that this market is likely going to withstand all threats.
Well, these market rallies come as 1. the US President meets the Chinese President at the G20 meeting and 2. US Fed Chairman says that US rates are near neutral, a 180 degree pivot from what he said 2 months ago. This means that we could be looking at more favorable investment environments in the coming weeks and months. A deal between the US and China is likely to not take place in our view, but who knows, anything can happen in Trump World.