Trump effect: Why crypto markets could lose steam after inauguration

The post-election market surge sees Bitcoin gaining 30%, with XRP and ADA outperforming.
Analysts predict potential Bitcoin correction amid mixed altcoin performances and investor caution.

The cryptocurrency market experienced a remarkable surge following Donald Trump’s victory as the 47th President of the United States.

This post-election boom has sparked widespread optimism among investors, with many attributing the bullish momentum to the election outcome.

However, discussions are emerging around a potential slowdown, as historical data on market trends during U.S. election years suggests that the rally might taper off following Trump’s inauguration on 20th January 2025.

These insights bring caution to the otherwise optimistic crypto market sentiment.

What are historical trends suggesting?

Historical patterns analyzed by Bloomberg and Macrobond Financial reveal that U.S. markets, including stocks and cryptocurrencies like Bitcoin [BTC], often rally in the weeks following a presidential election but tend to lose momentum once the President-elect takes office.

The current market surge, fueled by optimism surrounding the incoming administration, mirrors this trend, with the S&P 500 recently achieving its 50th record close of the year.

However, with over two months remaining until Inauguration Day, analysts caution that investor enthusiasm may be outpacing realistic expectations, suggesting a potential cooling-off period ahead.

Execs weighing in

Remarking on the same, Scott Chronert, Citi’s US equity strategist, reportedly wrote in a November research note.

“[I]nvestors should tactically fade a postelection rally should the S&P 500 exceed our 6100 year-end bull case target, which roughly aligns with a +5% index move from election day.”

Data from research group TS Lombard highlights that market euphoria tends to be stronger when the elected president belongs to the Republican party, which is often perceived as more business-friendly.

This dynamic amplifies post-election rallies, as investor sentiment aligns with expectations of pro-business policies, tax incentives, and deregulation initiatives that typically follow Republican administrations.

Such trends underline the heightened optimism fueling recent market surges, particularly in the wake of the current Republican victory.

In fact entrepreneur and investor Eric Soda further confirmed this pattern with a graph where he stated,

Source: Eric Soda/X

Trump’s crypto impact post-election

For those unaware, Bitcoin’s post-election surge has been particularly notable, with its value climbing over 30%, reinforcing its status as the leading cryptocurrency.

Similarly, Solana [SOL] mirrored these gains, highlighting the broader market’s bullish sentiment.

Thus, while analysts are optimistic that Bitcoin’s upward trajectory will persist beyond the inauguration, they caution that the path ahead may not be without its challenges, as the market adjusts to evolving economic and policy landscapes.

As expected, Ash Crypto put it best when he said,

Source: Ash Crypto/X

However, not all analysts share the prevailing optimism about Bitcoin’s unbroken rally.

For instance, Ryan Lee, Chief Analyst at Bitget Research, cautions that Bitcoin’s price could face a significant correction of up to 30% before regaining its bullish momentum.

Current market trends

Currently, as per CoinMarketCap, Bitcoin was trading at $96,198.85, reflecting a slight 0.08% dip over the past 24 hours.

Meanwhile, altcoins have shown mixed performance—Ethereum [ETH] is priced at $3,663.51, down 0.26%, while Solana has risen to $229.68, gaining 1.03%.

Notably, Ripple[XRP] and Cardano [ADA] have emerged as standout performers, with impressive daily gains exceeding 13% and 15%, respectively, showcasing the diverse momentum within the crypto market.

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The post-election market surge sees Bitcoin gaining 30%, with XRP and ADA outperforming.
Analysts predict potential Bitcoin correction amid mixed altcoin performances and investor caution.