Key Points
- Donald Trump’s election win is expected to boost Bitcoin and gold values, according to JPMorgan analysts.
- MicroStrategy’s ambitious “21/21 plan” will inject $42 billion into Bitcoin over the next three years.
Following the recent US presidential election, financial markets have been impacted by Donald Trump’s victory. Analysts from JPMorgan suggest that both Bitcoin and gold are set for substantial gains, emphasizing the potential of the “debasement trade”.
The Debasement Trade and Its Impact
The debasement trade refers to an investment strategy where investors turn to assets like Bitcoin and gold to hedge against currency weakening. This typically happens during times of inflation or when governments adopt expansionary fiscal policies that increase debt and devalue the currency.
JPMorgan’s managing director, Nikolaos Panigirtzoglou, commented in a recent report that the debasement trade is likely to be reinforced by factors such as tariffs, geopolitical tensions, and an expansionary fiscal policy. He also noted that Bitcoin, a key component of the debasement trade, rallied after Trump’s win.
The price of Bitcoin soared to a record high of $76,200 on November 6, the day Trump’s victory was confirmed. Currently, Bitcoin is trading around $75,100, reflecting market anticipation of favorable policies under the new administration.
Michael Saylor, founder and chairman of MicroStrategy, the largest public corporate holder of Bitcoin, expressed his excitement on social media platform X, posting a photo of a Bitcoin flag atop the White House with the caption: “We have a #Bitcoin President.”
MicroStrategy’s Bold $42 Billion Investment
Adding to the bullish outlook, MicroStrategy has revealed an aggressive Bitcoin acquisition strategy called the “21/21 plan”. The company plans to raise $42 billion over the next three years, with $21 billion from equity and $21 billion from fixed-income securities, to invest in Bitcoin.
JPMorgan analysts noted, “For 2025 alone MicroStrategy would be investing $10 billion into Bitcoin which is roughly equal to its cumulative purchases so far since mid-2020!” This substantial investment is expected to significantly impact Bitcoin’s market dynamics.
Trump’s pro-crypto stance has garnered international attention. Leaders like Nayib Bukele, President of El Salvador, a country that adopted Bitcoin as legal tender, have congratulated Trump, highlighting the global implications of US crypto policy changes.
His promises include firing SEC Chair Gary Gensler, establishing a National Bitcoin Reserve, and eliminating capital gains tax on Bitcoin transactions. These pledges have stirred hope for a more favorable regulatory environment in the United States.
The Influence of Central Banks and Gold
JPMorgan analysts also stress the significance of central bank activities in shaping the future of gold. After substantial gold purchases in 2022 following the Ukraine conflict and sanctions on Russia, central banks like China’s have paused acquisitions. However, ongoing geopolitical tensions may prompt renewed diversification away from dollar reserves into gold.
Retail investors have been increasing their holdings in both gold and Bitcoin, with heightened investments in ETFs since last summer. JPMorgan anticipates this trend to continue into 2025, further supported by Trump’s policies that favor alternative assets.
When asked about a 2025 price target for Bitcoin, Panigirtzoglou stated they “are positive on Bitcoin into 2025”, but refrained from specifying a figure. The combined effect of policy changes, corporate investments, and global market dynamics suggests a bullish horizon for both Bitcoin and gold.
