“Election day triggers a cryptocurrency second wind, Talos wins digital asset innovation award, AI art garners huge price at Sotheby’s auction.”
TradFi & Global Market News
Global Market: S&P 500 & NASDAQ
Election seasons always bring about volatility in the stock markets. Over the past month, the S&P 500 and NASDAQ have seen slight dips from their steady 5850 and 18500 prices, respectively, in the days before the election on November 5. Key headlines in this period include Intel falling out of the Dow Jones Industrial Average, with NVIDIA taking its place. Intel announced a $16.6 billion quarterly loss, and its stock prices plummeted 54% as the historic semiconductor giant shows how AI is completely overhauling incumbent technology players if they fail to capitalise on its trajectory.
With Trump emerging victorious, both composites have seen sharp rises to yearly highs of 6001.35 and 19298.76, respectively; however, this is due to post-election sentiment rather than any signal of Trump’s economic plans as there is heavy momentum behind stocks that have a close link to the incoming party, in this case, Tesla has seen 9% jumps in stock price. Ideally, Trump’s post-election rally can seep into the holiday season rally coming in just a month, giving substantial backing to Trump in an election where economic well-being has been at the forefront.
Election News: Trump
The narrative for Trump’s votes has been straightforward. Despite recent deflationary action, many working-class voters have held on to the sting from the past four years under the Democratic party in a post-COVID economy. Promises of lowered inflation lowered taxes, and increased protectionism resonated with these voters, resulting in his victory. Traders should expect stock prices to rise quickly as company profits will grow under a low tax regime.
Taking a broader macroeconomic lens, the USA has been consistently battling three new challenges in recent years: its debt crisis, developing a new economic growth model and preserving global leadership.
Renewable Energy Woes
His climate change and energy policies are contentious. Controversially, Trump has villainised green projects like offshore wind and even electric vehicles despite solid support from Elon Musk. The Republican party has labelled efforts to diversify renewable energy sources under the Inflation Reduction Act a waste of funding, and further protectionism will set back global EV markets significantly, as trade wars against China may flare up.
Tariffs
Trump’s tariff policies include a 10-20% tax on all imports with heavy targets towards Mexico and China, with vows to tax up to 25% and 60% of all goods in each country, respectively. Tariffs are not Trump-specific policies and have been around since Biden’s administration; however, tariffs of this extent have not been seen since the Great Depression. While Trump’s policies to protect existing economic drivers are admirable, the creative destruction of current jobs and the need for America to embrace new economic drivers as climate change creates new business opportunities is a fine line that Trump’s policies may tip over unfavourably in the long run. Additionally, the increased costs of tariffs are likely to be passed down to consumers regardless, with the National Retail Foundation expecting these tariffs to create an additional $7600 additional spend for households. Furthermore, the lack of foreign competition will allow existing American firms to raise prices or even slow innovations, which may be detrimental to the wage crisis voters seek to eliminate.
Global Impact
Security concerns will be at an all-time high as a typically antagonistic Trump is back in power. This is particularly concerning as China is much more protectionist than in Trump’s first term as president, and tensions in Korea have increased concurrently. With both superpowers prioritising internal strength, a threat of the US disrupting China’s pursuit of growth, like through EVs, for example, may spark retaliation. Furthermore, Trump’s monetary policy focuses on creating a strong US dollar, which may slow down the interest rate cuts, which will spill over to allied nations and emerging economies.
DeFi & Digital Assets News
Cryptocurrency Market: Bitcoin & Ethereum
One of the biggest winners from the election is digital asset investors, as the election narrative for both parties signalled their shift towards embracing cryptocurrencies in their economic outlook. Since the election, both Bitcoin and Ethereum have been beneficiaries of the “Trump Pump” as they witnessed a 35-40% increase in value over the past week, spiking to highs of 88571 and 3370 as both currencies spot ETFs witnessed $2.01 billion and $132 million in inflows post-election. Smaller coins are also getting a taste of the boost as Dogecoin, Coinbase, and MicroStrategy have all risen by 20-25% as trades increase. Ultimately, most of the drive comes from hope over promises to make the USA the “crypto capital of the world”, as the 100,000 valuation looks closer to a reality than a fantasy.
Election News: BITCOIN Act
While there are doubts about the long-term sustainability of Trump’s macroeconomic policies, many investors are bullish on the long-term effects of Trump’s reign on digital assets. Overall, there are three avenues to look at: Domestic Macroeconomic Policies, Investor Appetite and Regulatory Developments. The first two aspects have been touched upon as per above. To summarise, there may be long-term economic headwinds regarding interest rate concerns that have plagued cryptocurrencies over the past year. However, a protectionist Trump could likely mean increased pushes for financial alternatives against the US dollar.
The most exciting avenue to monitor would be the effects of a crypto-positive government on the regulatory environment. While Trump’s call for the removal of the SEC chairman appears symbolic of his stance rather than practical given the legislation in place, all eyes are on a past promise for a Bitcoin Strategic Reserve in which the US Federal Reserve will acquire 1 million Bitcoins over under the aptly named Boosting Innovation, Technology and Competitiveness through Optimised Investment Nationwide (BITCOIN) Act. This plan aims to halve the US debt by 2045 in a 20-year hold promise. With integration into the Federal Reserve, investors could hope to revisit other policies previously quashed by the democratic party, such as backing stablecoins with the Reserve.
While momentum is good, traders should capitalise on this momentum now as there are some headwinds and uncertainty. Firstly, Trump’s anti-crypto past and volatile decision-making history should keep retail investors on their toes. Many election promises may become an afterthought as the president focuses on macroeconomic strategies. Secondly, the next significant enabler for crypto will be the direct integration between banks and cryptocurrencies. Banks’ unwillingness to enable cryptocurrency transactions will continue to be a problem, with or without solid government support. Thus, Trump must carefully navigate this relationship with centralised and decentralised financial systems. Thirdly, some crypto enthusiasts are weary that the government’s over-intrusion into cryptocurrencies detracts from their true value proposition. For example, under the BITCOIN Act, the government could own up to 5% of the total Bitcoin supply, which leaves room for whale manipulation.
FinTech News: Talos
Earlier this month, the digital asset platform Talos picked up its second award of the year, swooping the “Best Trading and Execution Solution Provider for Digital Assets” at the 2024 Global Digital Assets Awards after already winning Hedgeweek’s award for the “Best Trading Platform”.
Operating across the globe, Talos is the hallmark of business evolution and innovation in the digital assets trading space. Starting with its flagship order and execution management system (OEMS), Talos continued to innovate. In October this year, they helped realise the need for a familiar full-service trading platform by developing its Portfolio Management System (PMS) through Cloudwall and D3X Systems acquisitions. The PMS now hosts a variety of support features like live risk monitoring and portfolio optimisation tools that can be integrated with the existing OEMS. This system familiarises existing traders who are used to having such extensive support on traditional trade platforms, easing their transition towards digital asset trading by providing complete front-to-back management of the trading life cycle.
In Other News…
Short Updates:
Ai.Da – An AI artwork by Ai.Da of Alan Turing was sold for over £800,000 at Sotheby’s Digital Art Day Auction. The artist behind Ai.Da chose Turing as the subject matter for his worries about AI in the 1950s and the haunting style was purposeful to reflect a fragmented world as society faces disruptive technologies like AI.
New European Competitiveness Deal – In Budapest, EU leaders have gathered to decide on a collective push to improve research, innovation and education by committing to meet a 3% target of GDP expenditure of R&I initiatives to close the competitive gap with the US and China, significantly as protectionist policies will increase over the following years.
Opportunity Spotlight
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