Synopsis
As Donald Trump inches closer to victory in the US presidential election, Bitcoin prices surged past $75,000, signaling a risk-on sentiment in the market. This surge coincided with a correction in the Indian stock market, with the MSCI India ETF dropping over 8%.
With Donald Trump — who has promised to make the US the cryptocurrency capital of the world — edging closer to victory in the US presidential election, Bitcoin prices jumped above the $75,000 mark to hit fresh record highs. Its market capitalization is also nearing the $1.5 trillion-mark.
Beyond the world of cryptocurrency, the surge in Bitcoin prices is also seen as a positive indicator for equity as an asset class as it denotes the risk-on sentiment in the market currently.
“Bitcoin is a proxy for risk taking appetite in the markets. Bitcoin moving up means the risk appetite of investors is rising. Conversely, if it falls then investors prefer safety,” SAMCO Securities said.
Crypto Tracker
TOP COIN SETSAI Tracker3.41% BuyCrypto Blue Chip – 51.64% BuyBTC 50 :: ETH 500.84% BuyWeb3 Tracker0.20% BuyNFT & Metaverse Tracker-3.78% BuyTOP COINS (₹) Solana15,550 (14.17%)BuyEthereum220,874 (7.78%)BuyBitcoin6,231,068 (7.7%)BuyBNB48,962 (4.09%)BuyTether84 (0.31%)BuyAn analysis of MSCI India ETF and Bitcoin prices since 2020 shows that the rally as well as correction in Bitcoin coincides with the price movement in MSCI India ETF.
Did you Know?
The world of cryptocurrencies is very dynamic. Prices can go up or down in a matter of seconds. Thus, having reliable answers to such questions is crucial for investors.
View Details »“Emerging markets like India too are a proxy for risk for foreign investors. MSCI India ETF is down more than 8% from the recent highs while Bitcoin has hit a new all-time high,” the brokerage said.
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Bitcoin price movement, it said, could signal a comeback of FIIs who have pumped out more than Rs 1 lakh crore in the last few weeks from Dalal Street.
In the meantime, after ending the previous session 694 points higher Sensex rallied over 1,000 points during the day as a favorable corporate tax regime alongside low regulatory burden could boost equities.
However, the Trump administration is likely to bring renewed trade tensions, with potential adverse effects on India’s key export sectors and capital inflows.
“The economic outlook for India will depend significantly on the global trade environment and how quickly the US economy adjusts to the policy changes that are likely to follow a Trump victory. Trade tariffs he will definitely bring into China could be beneficial for India because Indian sectors will benefit like manufacturing. But tariffs on India will affect some sectors,” said wealth manager Nitin Aggarwal of Client Associates.
Investors are pricing in higher US tariffs, elevated geopolitical risks and greater global uncertainty under a Trump presidency leading to a rally in US dollar.
“India’s fundamental strength remains strong. The correction or adjustment led by outflows seen in the last one month should therefore reverse. In the medium to longer term, positive outcomes should emerge from the constructive relations India has with both the USA and Donald Trump. Currency adjustments can well be managed with the reserves India has built. The only caveat could be that the US rate cutting cycle could be slower than anticipated which could also translate into a shallow rate cutting cycle for India,” Anitha Rangan, Economist, Equirus, said.
