Investors are anticipating new policies which could boost crypto markets and benefit small companies following Donald Trump’s victory in the US Presidential election.
Investors speculated that the Trump administration would create a more business-friendly regulatory environment. The iShares Russell 2000 ETF, which tracks small cap stocks, jumped 6% Wednesday. This was its biggest move in years.
Trump’s business agenda is a boon for small-cap stocks
Small-cap stock prices are surging amid expectations that Trump’s new tax and regulatory policies will favor small business.
Chris Senyek is a Wolfe Research strategist who noted that the administration could prioritize “the extension of individual tax cuts and their pass-through” along with deregulation measures which often help small businesses grow.
Senyek also predicts that the Republican Congress will offer a strong fiscal package in the next year. This could help to counteract economic slowdowns, and provide support for smaller businesses.
The iShares Russell 2000 ETF posted its fourth largest opening gap Wednesday. It has risen about 25% since its low for the year.
Analysts anticipate that Trump’s domestic policies and a fiscally supportive environment will keep the small-cap stock market strong over the next few months.
This sector could see further growth if there is an increase in mergers and acquisitions (M&A), as well as a focus on American companies.
Performance of Small-Cap Stocks Post-Election
Small-cap stocks, historically, have shown a high level of resilience after US elections.
Small-cap stocks, for example, surged both after Trump’s 2016 election victory and Biden’s 2020 win.
The sector has shown a tendency to adapt and investors are optimistic about the economic policies which often come after a change in administration.
CoreCivic, Geo Group and other small cap stocks all saw strong gains Wednesday. CoreCivic rose over 20%.
Under Trump, such companies will benefit from the new policy that favours businesses with a domestic focus.
Bitcoin prices rise as sentiment towards cryptos turns positive
Bitcoin related shares have also been on the rise.
Bitcoin’s record-breaking high reached by Trump after his election win led to a surge in shares of companies like TeraWulf, Riot Platforms and others.
Crypto advocates and investors are hopeful about Trump’s position on cryptocurrency, expecting regulatory changes to further legitimize the industry.
Michael Novogratz of Galaxy Investment Partners expressed his confidence about the potential impact that Trump could have on crypto.
He told CNBC that Trump’s presidency will be “a step change” in the industry.
Novogratz believes the US can become a leader on the global crypto market with the help of regulatory assistance, such as bank approvals to keep crypto in their balance sheet. This would bring millions into the system.
Trump’s anticipated appointments in key positions such as the Office of the Comptroller of the Currency and the Securities and Exchange Commission and the Federal Deposit Insurance Corporation could further boost investor sentiment for digital assets.
Investors’ optimism about potential growth in an administration that is pro-business can be seen by the bullish sentiment surrounding small-cap stocks and Bitcoin. Investors will be closely watching Trump’s administration to see what policy changes are made in regards to deregulation and tax reductions. This could drive gains for both small-cap stocks and Bitcoin.
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