Did the election of Donald Trump send a jolt through the bitcoin market?
Bitcoin has started the year with a bang, surging past the $1,000 dollar mark on the second day of the year. This doesn’t mark the first time bitcoin has reached such heights, but it does mark the first time in three years that bitcoin has breached the thousand dollar mark. This time around, bitcoin first crossed the $1,000 dollar threshold in Bitstamp, a European-based exchange. The currency had been lingering below the thousand dollar mark through much of December, but a 2.5% surge sent it over the top.
So why has bitcoin rising so rapidly? Part of it comes down to uncertainty over the global economy, and especially the election of Donald Trump. Bitcoin is seen as a safe haven asset, and when people are worried that traditional stock markets and other financial markets will collapse, they pour money into gold, bitcoin, and other similar assets. Bitcoin’s government-free nature makes it very attractive for people looking to protect themselves from turbulence in traditional markets.
Perhaps the biggest driver of the recent price spike has been the drop in value for the Chinese yuan and also Indian rupee. With the election of Donald Trump and his potentially protectionist measures, some exporting countries are coming under heavy pressure. Who knows if Trump will actually enact any of his policies or if it’s all bluster, but many people in exporting countries are worried.
In turn, many of these wealthy individuals have been pulling their money out of the yuan and other at-risk currencies. One of the most popular destinations for wealth has been bitcoin, and demand has a huge influence on price. As demand has increased, prices have increased too.
It’s important to note, however, that bitcoin has also been on an upward trend over the past few years. Up until the last few months the climb has been pretty steady. From January to early November, bitcoin rose from just under $400 dollars to over $600, a substantial increase on its own. Since Trump was declared the winner, prices have surged from about $630 to over $1000. Obviously, this is a huge price increase, so bitcoin investors have to really sit down and ask themselves whether prices have peaked, or if they could climb even higher.