Bitcoin (BTC), the world’s oldest and most valuable cryptocurrency, soared past $109,500 over the weekend in the run-up to Donald Trump’s inauguration as the next US president. The rally has drawn attention to Trump-related cryptocurrencies, including TRUMP and MELANIA coins, which experienced dramatic market movements early yesterday.
TRUMP coin, the meme cryptocurrency associated with the president-elect, saw its value drop over 50 per cent after Melania Trump introduced her own cryptocurrency, MELANIA.
Despite hitting an all-time high of $75.35 within 24 hours, TRUMP later plunged to $53.40, with a day’s low of $35. The sell-off wiped nearly $5 billion from its market value. Analysts speculate that any pro-crypto policy announcements by Trump, including potential rate cuts, could spur further rallies in Bitcoin and other digital assets.
The oil market remained steady ahead of Trump’s inauguration, with Brent crude trading below $81 per barrel and West Texas Intermediate hovering near $78. Frigid weather in the Northern Hemisphere, coupled with US sanctions on Russia, have disrupted tanker markets and pushed up Middle Eastern crude prices.
Incoming Treasury Secretary nominee Scott Bessent has indicated support for stricter sanctions on Russia’s oil industry, which could further disrupt global supply chains. Meanwhile, Trump’s plans to impose hefty tariffs on trade partners such as China, Canada, and Mexico, along with potential sanctions on Iran, are fuelling uncertainty in energy markets.
According to Vishnu Varathan, head of economics and strategy at Mizuho Bank, “If Bessent gets his way, the energy sanctions will only tighten. The bigger picture, however, is the US extending its reach as a dominant energy exporter.”
Speculators have increased long positions on Brent crude, despite concerns about potential supply disruptions. Trump is also reportedly considering invoking emergency powers after his swearing-in to bolster domestic energy production.
Gold prices continued their upward trajectory for the third consecutive week, despite a slight dip on Friday. The precious metal is holding steady at around $2,710, supported by a moderation in the Core CPI reading.
The market is weighing the potential impact of Trump’s trade policies, which could reignite inflationary pressures and spark geopolitical tensions. While trade wars and sweeping tariffs may dampen gold’s appeal, heightened global uncertainty under the Trump administration could drive investors toward safe-haven assets like gold.
As market participants navigate these volatile conditions, Vijay Valecha, chief investment officer at Century Financial, notes that “the intersection of geopolitical uncertainty, inflation concerns, and evolving cryptocurrency trends will play a pivotal role in shaping global markets in the weeks ahead.”
Ole Hansen, head of commodity strategy at Saxo Bank, has cautioned investors about a potential shift in commodity market trends. In a new report, Mr Hansen highlights a surge in hedge fund activity, pushing net long positions in major futures contracts to a near three-year high. This heightened speculative interest, particularly in energy, grains, and livestock, could amplify price swings and increase the risk of a market correction.
Furthermore, Mr Hansen notes that speculators have significantly increased their net long positions in the USD, driven by broad dollar strength and short-covering in major currencies like the Euro, Canadian dollar, and Japanese yen.
avinash@gdnmedia.bh
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