How Far Will Trump Drive Bitcoin (BTC)?

The financial markets are experiencing a historical period as Donald Trump prepares to enter the White House. Bitcoin is surging, Tesla is regaining its colors, while the euro is collapsing against the dollar.

Trump and Musk: the duo that shakes Wall Street

The announcement of Elon Musk’s appointment to head the “Department of Government Efficiency” (DOGE) by Donald Trump has created a shockwave in the markets. This strategic appointment aims to streamline U.S. public spending, while U.S. debt reaches historic highs. A decision that marks a turning point in the management of U.S. public finances.

The market applauds this decision that promises a more liberal approach to public management. The S&P 500 and Nasdaq are setting records, fueled by hopes of pro-business policies and a reduction in public spending. The prospect of a Trump-Musk administration galvanizes investors who anticipate a wave of business-friendly reforms.

This political orientation sharply contrasts with the more conservative European approach, mired in its social gains and welfare state. Investors are betting heavily on a widening gap between American and European market performances. This divergence reflects fundamental differences in the ability to implement structural reforms.

Bitcoin regains its luster thanks to Trump

Bitcoin is experiencing a spectacular rally, driven by several factors. First, Trump’s turnaround on cryptocurrencies, who was previously quite critical. Next, the shocking statements by Elon Musk calling the dollar a “simple piece of worthless paper” and praising the merits of bitcoin.

Trading volumes are exploding and BTC is smashing its technical resistance levels, in a movement reminiscent of the best times of 2021. This dynamic pulls the entire crypto sector along with it, particularly Dogecoin, which jumps over 300% in a month.

The growing adoption of cryptocurrencies by institutional investors reinforces this trend.

The recently approved bitcoin ETFs are attracting massive inflows of capital, confirming the gradual legitimization of this asset class among traditional investors.

SMCI: from euphoria to scandal in AI

Super Micro Computer (SMCI) perfectly illustrates the excesses of the current market. The stock achieved an extraordinary performance of 300% in 49 days at the beginning of 2024, driven by the artificial intelligence bubble. This vertiginous rise recalls the excesses of the internet bubble of the 2000s.

But the fairy-tale abruptly turned into a nightmare when an auditor discovered irregularities in the company’s accounts. This revelation caused a spectacular collapse of the stock, reminding investors of the importance of caution even in the most promising sectors.

This scandal raises questions about the quality of controls in high-growth tech companies. It also highlights the risks associated with speculation on AI-related values.

The euro under pressure against the dollar

The single currency is going through a difficult period. The Dollar Index, which measures the strength of the greenback against a basket of currencies, reaches heights not seen since 2022.

This situation is explained by the growing divergence between the U.S. and European economies. On one hand, the United States shows renewed dynamism under the Trump-Musk impetus. On the other hand, Europe struggles to reform and suffers from major structural issues: an aging population, record public debt, lack of competitiveness.

Analysts also point to Europe’s lag in future sectors like artificial intelligence and renewable energies. This technological weakness could weigh heavily on the competitiveness of the Old Continent.

LVMH: luxury in question

The French luxury giant LVMH perfectly illustrates the current market paradox. Despite solid fundamentals and an attractive valuation, the stock struggles to take off. This situation serves as a reminder that in the stock market, market psychology often takes precedence over fundamentals.

Investors seem to prefer American tech stocks, neglecting European jewels despite their intrinsic quality. This behavior reinforces the gap between Europe and the US and raises questions about the future of European champions.

The sector rotation in favor of technology and at the expense of traditional values could continue, driven by enthusiasm for artificial intelligence and new technologies.

Tesla: the comeback

The electric car manufacturer is fully benefiting from the closeness between Musk and Trump. Tesla’s stock rebounds sharply, buoyed by the prospects of a policy favorable to electric vehicles and the growing aura of its CEO.

However, Chinese competition is intensifying and the manufacturer’s margins are under pressure. These challenges remind us that even the most innovative companies must constantly reinvent themselves to maintain their lead.

Gold gives ground to BTC

The precious metal, a traditional safe haven, faces direct competition from bitcoin. While gold is undergoing a correction of about 10%, cryptocurrencies are capturing an increasing share of investment flows in search of protection against inflation.

This dynamic could mark a structural change in investors’ perception of safe havens, particularly among the younger generations. Gold must now contend with new competitors in its role as protection against inflation.

The rise of the dollar also weighs on the price of gold, illustrating the growing interconnection of different asset classes in a globalized financial world.

How to avoid losing everything?

In this tumultuous context, portfolio management requires more than ever a methodical approach. Investors must navigate increasingly complex markets, where psychology plays a predominant role.

The example of GameStop, which saw its price multiply by 100 in a few months, serves as a reminder that anything is possible in the stock market, both up and down. This reality demands rigorous risk management and great discipline.

The growing importance of social networks and amateur investor forums is disrupting traditional balances. Speculative movements can now amplify very quickly, necessitating increased vigilance.

In the face of these volatile markets, several investment approaches stand out. “Swing trading,” which involves capturing medium-term movements, is gaining popularity. This strategy allows to benefit from trends while limiting exposure to abrupt reversals.

Moreover, thematic investment, particularly in artificial intelligence and energy transition, continues to attract capital.

Everything went crazy with Trump

The current market offers exceptional opportunities but demands increased vigilance. The growing polarization between the United States and Europe could continue to influence markets in the coming months.

Elon Musk’s appointment by Trump could mark the beginning of a new era for American financial markets. However, high valuation levels and geopolitical tensions call for caution.

The future will tell if this American election period will go down in history as the beginning of a new phase of expansion or as the prelude to more painful adjustments.