Donald Trump’s election victory is bringing a breath of fresh air to the markets and putting many investments on track. The success was a real booster, especially for Bitcoin: the $90,000 mark has been broken. Will the USD 100,000 mark fall soon?
Bitcoin price has its sights set on the $100,000 mark
Trump promises to leave the crypto market largely unregulated. This is like music to the ears of crypto disciples. And: he had proclaimed himself “Bitcoin President” at a national Bitcoin conference and announced that he would make the USA the “crypto center of the planet”. But that’s not all: Trump also announced that he would create a “national reserve” in Bitcoin and thereby “create a national asset from which all Americans benefit.” With the term “national reserve,” Trump alludes to the state’s existing strategic reserves of gold and oil. It is intended to suggest stability in times of crisis. But as always with Trump, it remains questionable whether this plan will actually be implemented. In any case, the price of the cryptocurrency is pointing steeply upwards. But you should keep in mind: What goes up steeply can fall just as steeply again.
Trump’s private interests
But whether Trump only has the interests of the USA in mind remains questionable. Because he also has a very personal interest in improving the market environment for cryptocurrencies. Three years ago, the future president called Bitcoin a “fraud”. Now the change of heart, which is likely to be reflected in his own wallet. “World Liberty Financial” was only founded in October – a crypto project “inspired by Donald Trump”. A rascal who thinks evil!
The stock market still has room for improvement
Well, we are not big crypto fans and prefer to stick to the stock market. And he has benefited greatly since the Trump election. The US small cap index Russell 2000 closed near its all-time high from November 2021, and the S&P 500 broke the 6,000 point mark for the first time. The optimistic mood is also reflected in a recent survey of global fund managers. While three quarters of those surveyed in October still expected a slowdown in the US economy, after the US elections only a good half did. The proportion of those who expect the economy to improve rose from 14 to 33 percent. And the proportion of those who overweight US stocks in their portfolios rose from 10 to 29 percent. On average, institutional investors report their cash ratio at four percent, some of which could flow into US stock markets in the coming weeks. Greetings from the year-end rally.
US stocks remain expensive – Fed before interest rate break?
But: US stocks have now become very expensive again. With an expected price-earnings ratio of 22 and 27 for 2025, the S&P 500 and the Russell 2000 are trading around a quarter and a fifth above their respective ten-year averages. Investors should therefore expect short-term corrections at any time. Inflation in particular has picked up again in the USA. Producer prices rose by 2.4 percent in October compared to the same month last year, slightly more than expected. The core rate – excluding energy and food – also rose more strongly than expected at 3.1 percent. If there is a pause in interest rates now in January, it could catch some investors off guard.
Europe’s insurers and reinsurers shine with excellent balance sheets
While there is optimism everywhere on the American markets, there is more gloom in Germany. And things aren’t looking much better in the broader European market either. Nevertheless, we are invested in some European stocks – especially insurance and reinsurance stocks. The Norwegian Storebrand is the top stock in the Frankfurt equity fund for foundations and is also prominently represented in the Frankfurt UCITS ETF – Modern Value. But we are also invested in Allianz, Munich Re and the French insurance group SCOR. The Munich reinsurer and Hannover Re can shine with impressive balance sheets. This seems safer to us than betting on the “Bitcoin President”.
By Frank Fischer, Chairman of the Board and Chief Investment Officer at Shareholder Value Management AG
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How has the increase in Bitcoin’s price since Trump’s re-election influenced investor sentiment towards cryptocurrencies, and what implications does this have for future market stability?
1. As a professional editor, my first question to both guests would be about the impact of Donald Trump’s election victory on the global financial markets, particularly the cryptocurrency market. What are your thoughts on the boost that Bitcoin has received since his election? And do you think this trend is likely to continue in the near future?
2. Mr. Fischer, as an experienced investor, you mentioned that you prefer to stick to the stock market. Could you elaborate on why you think US stocks are expensive right now, and what potential corrections or interest rate pauses investors should be prepared for? Additionally, you mentioned being invested in European insurance and reinsurance stocks like Munich Re and Hannover Re. Could you share your thoughts on why you believe these industries are more stable than betting on the ‘Bitcoin President’?
3. Turning to Mr. Smith, you mentioned that the ‘Bitcoin President’ could be a real game-changer for the crypto market. Do you think Trump’s plans to create a national reserve in Bitcoin and make the USA the ‘crypto center of the planet’ are realistic, or is this more of a political ploy? Furthermore, how do you think these developments might affect other cryptocurrencies like Ethereum and Ripple?
4. Moving on to broader market trends, both guests have expressed different views on the current valuations of US stocks. Mr. Fischer believes they are overvalued, while you seem to be more bullish on the market. Could you share your reasoning behind this and discuss potential risks or opportunities that investors should be aware of in the coming months?
5. with the rise of Bitcoin prices since Trump’s election, there has been some discussion about the potential for a broader adoption of cryptocurrencies. What do you see as the key challenges or barriers to mass adoption of cryptocurrencies, and what role do you think governments and central banks might play in shaping this trend?
