With the dollar reversing most of its early post-election gains and Treasury yields stabilizing in recent ranges, investors’ enthusiasm for “Trump trades” appears to be waning, according to a report by crypto and macro trading firm QCP Capital.
Investors Pull Back from “Trump Trading” as Markets Weigh Tariffs, Debt Concerns, QCP Reports
The shift comes as markets weigh the impact of President-elect Donald Trump’s proposed 60% tariffs on Chinese imports and fiscal issues such as the expanding national debt.
Initial market reactions to Trump’s election win led to strong rallies in both the dollar and Treasury yields, but those moves have since retreated, signaling caution among investors, QCP analysts said.
Amid this pullback, QCP sees the potential for Bitcoin (BTC) to emerge as a more stable alternative to stocks.
“Due to concerns about tariffs and fiscal policies, we project a lower risk premium for BTC relative to equities,” QCP said. “This environment could position Bitcoin to outperform other risky assets, especially as fiscal concerns escalate.”
QCP’s view suggests that BTC could serve as a relatively safer asset in the current economic environment, especially as traditional markets grapple with Trump’s trade policies and rising debt issues.
Analysts suggest that BTC’s correlation with equity markets may be decreasing, potentially appealing to investors looking for alternatives other than stocks.
*This is not investment advice.