Weekly Recap | 18-24 January: Key Market Developments

Ali Nili

Dollar Weakens Ahead of Trump’s Return; Euro Bounces Back

The US dollar dipped on Monday as Donald Trump prepared to return to the White House for his second presidential term. Trading volumes were muted due to the Martin Luther King Jr. holiday, with the Dollar Index down 0.3%, settling at 108.925—shy of last week’s two-year high.

The Greenback’s recent rally, which saw a 4% climb since November’s election, lost momentum as traders speculated about Trump’s potential impact on inflation and interest rates. Market attention is now focused on Trump’s inaugural address, which is expected to set the tone for his economic agenda.

Meanwhile, the euro rebounded by 0.3% to $1.0313, though it remains near a two-year low amid concerns over trade policies. German producer prices rose by 0.8% in December, falling short of expectations, while the European Central Bank faces growing pressure to cut interest rates further.

Gold Prices Maintain Negative Bias Amid Modest USD Strength

Gold prices (XAU/USD) declined in early Thursday European trading, ending a three-day winning streak. The US dollar regained strength for a second consecutive day, recovering from a monthly low, while a steady performance in equities also pressured gold prices.

Market expectations of two Federal Reserve rate cuts this year have kept US Treasury bond yields low, supporting gold. However, uncertainty surrounding Trump’s trade policies could heighten market volatility, limiting gold’s downside.

The US dollar stayed strong above its lows in late December, thanks to a slight increase in Treasury bond yields. This decrease in demand for safe-haven assets put pressure on gold prices.

Many view Trump’s policies as driving inflation, which may lead the Federal Reserve to keep raising interest rates to control prices. However, investors expect the Fed to cut rates at least twice this year, which could limit the gains for the US dollar and bond yields.

Upcoming events, including Trump’s speech at the World Economic Forum and US Weekly Jobless Claims data, will likely influence gold prices. Additionally, the Bank of Japan’s anticipated interest rate hike and forthcoming rate decisions from the Fed and ECB next week are expected to drive volatility in the yellow metal market.

Bitcoin’s Strategic Reserve Left Hanging as Trump Takes Office

Bitcoin hit a new all-time high in anticipation of Trump’s inauguration and prioritization of crypto. However, the event disappointed many traders. BTC has since corrected to $105,000 on Tuesday. US-based crypto assets could face volatility in the weeks ahead if the Bitcoin strategic reserve and other pre-election promises are left unfulfilled. 

President Donald Trump took office on January 20. Many in the crypto market hoped he would announce a national priority for cryptocurrency on his first day, but that did not happen.

Bitcoin, which had recently reached an all-time high above $109,000, fell to around $105,000 on Tuesday. Other top cryptocurrencies, like Ethereum and XRP, also lost their recent gains along with Bitcoin.

On his first day back in office, President Trump signed over 80 executive orders, but Bitcoin was not among the topics he addressed. He had promised to create a Bitcoin strategic reserve and support pro-crypto policies, influenced by campaign donations from crypto firms in the US.

Whether the US will prioritize a Bitcoin strategic reserve or other economic changes remains unclear.

On Trump’s first day, the crypto market experienced $816 million in liquidations because he did not take action on Bitcoin. Data from Farside Investors shows that institutional investors were becoming more optimistic about Bitcoin later in the week, as markets closed on Monday.

Trump’s new meme coin and crypto token soar on his first day in office.

A crypto project linked to former US President Donald Trump, World Liberty Financial (WLF), has raised $1 billion through token sales. As Trump began his second term, a new meme coin named $TRUMP also increased in value to over $10 billion.

The $TRUMP coin was launched on Friday night during the first-ever Crypto Ball in Washington, DC, as part of the inauguration events. On Saturday morning, its price jumped from less than $10 to a high of $74.59 before dropping back down.

CIC Digital, a company associated with Trump’s business, owns four-fifths of the $TRUMP tokens. Another group called Fight, Fight, Fight also holds some tokens. According to its website, the coin represents support for the ideals linked to the symbol ‘$TRUMP’ and is not meant to be an investment or security.

The timing of WLF’s launch just two months before the US election raised concerns about ethics and conflicts of interest. The launch of the meme coin also caused worry within the cryptocurrency industry.

Justin D’Anethan, an independent crypto analyst in Hong Kong, noted that this move could raise many ethical and regulatory questions.

Melania Trump Launches Her Cryptocurrency

The incoming first lady, Melania Trump, launched a cryptocurrency just before her husband became the US president. This announcement follows President-elect Donald Trump’s launch of the $Trump cryptocurrency. Both cryptocurrencies have gained value but are experiencing fluctuating trades.

On Sunday, Melania posted on the social platform X, “The Official Melania Meme is live! You can buy $Melania now.”

The websites for Trump and Melania state that they are not intended as investment opportunities or securities.

Trump’s market value is about $12 billion, while Melania’s is around $1.7 billion.

Trump had previously called crypto a “scam,” but during the 2024 election campaign became the first presidential candidate to accept digital assets as donations.

During the campaign, his family launched a cryptocurrency company called World Liberty Financial, which aims to lead “a financial revolution by dismantling the stranglehold of traditional financial institutions” and sells a crypto coin.

Trump Organization affiliate CIC Digital LLC launched the new Trump coin. It is linked to previous sales of crypto collectible NFTs launched in 2022 that made millions of dollars but have since fallen dramatically in value for their owners. 

According to CoinGecko, the NFTs once sold for more than $1,000 but have since dropped in value to around $300.

Crypto Campaign

During his campaign, Trump said he would build a Bitcoin reserve and choose financial regulators who support digital assets. This led to expectations that he would reduce regulations on the crypto industry. After Trump’s victory, Bitcoin hit a record high of about $109,000, according to the trading platform Coinbase.

On Friday, David Sacks, the new AI and crypto leader, hosted a “Crypto Ball” in Washington, DC. Other cryptocurrencies, like Dogecoin—backed by Trump supporter Elon Musk—also saw significant increases this year.

Under President Joe Biden, regulators expressed concerns about fraud and money laundering, which led them to take action against crypto companies by suing exchanges. The popularity of Dogecoin has raised interest in “meme coins,” cryptocurrencies often tied to viral trends.

Melania’s Meme coin was created through her company, MKT World LLC. She has used it since 2021 for various projects, including selling portraits of herself as first lady. Anyone can create meme coins, and there are thousands out there.

With a strong social media presence, the Trump and Melania coins have already made it into the top 100 coins by value. Melania’s coin is worth more than AI entrepreneur Sam Altman’s Worldcoin.

Conclusion

Financial markets are changing due to Trump’s presidency. The dollar has weakened, and the euro is slowly recovering, reflecting uncertainties in global trade. Gold prices are affected by US Treasury yields and Federal Reserve policy expectations.

In the cryptocurrency market, Trump-linked projects show mixed feelings as traders assess his views on digital assets. Institutional interest in Bitcoin is strong, but the lack of immediate policy action has reduced some enthusiasm.

The connection between politics, central bank decisions, and market sentiment will continue to create fluctuations. Investors should stay alert, as Trump’s policies and global economic changes will create opportunities and risks in currencies, commodities, and cryptocurrencies.

Total
0
Shares
Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Post

TradeLocker Auto-Sync Tutorial

Next Post

Weekly Recap | 25 Jan – 2 February: Key Market Developments

Related Posts