The US dollar, Bitcoin, and Tesla soar! Investors go All In on the "Trump trade"

The "Trump trade" has sparked a new climax in the market, with Bitcoin breaking through $88,000 for the first time in history, Tesla rebounding significantly by 39% since election day, and the dollar rising to a four-month high.

Following Trump's victory last week, the Republican Party secured a majority in the Senate, and the possibility of controlling the House of Representatives is also increasing, keeping the capital markets excited.

The dollar index hit a new high in over four months, with most non-dollar currencies declining.

Bitcoin is unstoppable, reaching new highs almost every day since the election, with the total market capitalization of the global cryptocurrency market surpassing $3 trillion for the first time in three years. Stocks related to cryptocurrencies have also risen sharply, analysts believe Bitcoin will sprint towards the $100,000 milestone by the end of the year.

Tesla has also begun an almost absurd rebound, rising 39% since election day. Analysts indicate that Tesla is a typical "momentum" stock, and its gains could snowball.

However, some analysts warn to be cautious. Drew Pettit, Citigroup's head of U.S. equity strategy, stated:

The market is currently in an excited state. Optimists believe Trump will be beneficial for the market and the economy, overlooking the potential for negative outcomes. Trump's proposed policies, including high tariffs, tax cuts, interference with the Federal Reserve's monetary policy, and mass deportation of millions of immigrants, could drive up the U.S. government deficit and reignite inflation after months of easing pressure.

Dollar Hits New High in Over Four Months, Non-Dollar Currencies Under Pressure

The "Trump trade" has ignited the dollar, with the Bloomberg Dollar Index rising 0.5% overnight, surpassing the level from the day after the election and reaching a new high in over four months.

Non-dollar currencies are collectively under pressure, with the euro falling more than 0.6% against the dollar, dipping to $1.063 at one point, the lowest level since April.

The dollar rose 0.70% against the yen, trading at 153.71 yen, remaining in a state of continuous upward fluctuation throughout the day.

In other currencies, the pound fell 0.40% against the dollar, trading at 1.2870, while the dollar rose 0.55% against the Swiss franc, trading at 0.8805.

Bitcoin Unstoppable, Sprinting Towards $100,000 Milestone

Bitcoin surged over 10% overnight, exceeding $88,000 for the first time in history. Since last week's election, Bitcoin's price has risen over 30%, setting new historical highs almost every day.

The entire cryptocurrency community is celebrating, as the bullish sentiment has also boosted smaller tokens, including Dogecoin.

Shares of cryptocurrency companies have also risen sharply, with Bitcoin proxy company MicroStrategy up 26% overnight, cryptocurrency exchange Coinbase rising nearly 20%, and cryptocurrency miners MARA Holdings and Riot Platforms increasing by 29% and 17%, respectively

Chris Newhous, research director at Cumberland Labs, stated:

Bitcoin continues to break expectations and set new highs. The market seems to finally realize that we are entering an undeniable bull market in the coming years.

Investors are betting that Trump will bring good news for the cryptocurrency industry, according to David Bailey, organizer of the Bitcoin conference BTC Inc:

The likelihood of Trump winning and the Republican Party achieving a significant victory is increasing, providing a very unique opportunity to advance transformative legislation. The U.S. will become a global powerhouse for Bitcoin and cryptocurrency.

The Trump administration is expected to support the cryptocurrency industry, and with control over both houses of Congress, it will have greater power to enact favorable legislation. Trump and his congressional allies have previously expressed support for establishing a national Bitcoin reserve.

Looking ahead, Bitcoin options traders have set their sights on the $100,000 milestone. According to data from the cryptocurrency options exchange Deribit, investors are betting that Bitcoin will break this milestone as early as the end of the year.

Deribit data shows that as of Monday morning London time, there were 9,635 Bitcoin (worth approximately $780 million) in open contracts betting that Bitcoin will reach $100,000 by December 27. This is the highest bet among all trades for that expiration date, and Deribit estimates the odds of this trade's return at 18.6%.

Tesla Soars 39%, Nearly Absurd Rebound

Musk fully supports Trump, and after Trump's victory, Tesla fans have also rallied. With investors buying Tesla stock, the stock has risen over 39% since the November 5 election, adding more than $300 billion in market value.

Market professionals point out that Tesla is a typical "momentum stock," and when investor sentiment shifts dramatically, its gains or losses can quickly snowball.

Steve Sosnick, chief strategist at Interactive Brokers, stated:

Musk bets on Trump winning, and Tesla becomes a beneficiary. Coupled with the market's enthusiasm for buying the dip and chasing gains, often using leverage or options to achieve this, we have seen an almost absurd rebound pattern.

Options traders are betting that Tesla will rise further, with the premium of three-month call options relative to put options reaching the highest level since early 2021. Tesla's stock price is expected to break the intraday historical high of $414.50, which was set during the pandemic when retail investors pushed up the prices of many popular stocksWedbush analyst Daniel Ives stated that Trump's entry into the White House will "completely change" Tesla's autonomous driving and artificial intelligence business, and he raised Tesla's target price from the previous $300 to $400