The US dollar fell, and Bitcoin surged to a record high on Monday ahead of Donald Trump’s inauguration as US president later in the session, with investors anticipating policy announcements that could impact financial markets.
Bitcoin hit an all-time high of $109,071.86 before settling 4.2% higher at $107,120, buoyed by softer US inflation data and expectations of multiple Federal Reserve rate cuts. Trump, who has pledged to be a “crypto president,” is expected to issue executive orders promoting digital assets. Analysts, however, warned of a potential “sell the news” reaction if policy measures are delayed.
The dollar index, which measures the greenback against six major currencies, fell 0.36% to 109.02, retreating from last week’s 26-month high of 110.17. “There are high expectations of Trump announcing trade tariffs under executive order along with many other policy announcements that could prompt further US dollar gains,” said Derek Halpenny, head of research global markets at MUFG.
Despite Monday’s dip, the dollar has gained 4% since Trump’s election victory in November, driven by expectations that his policies will boost economic growth and inflation.
Goldman Sachs strategists see the potential for a further 5% rise in the dollar over the next few months but warned of near-term risks tied to market expectations for swift tariff actions.
The yen remained near a one-month high amid speculation that the Bank of Japan could raise its policy rate this week. Trading volume was thin due to the US Martin Luther King Jr. Day holiday.
At a rally on Sunday, Trump reiterated plans to impose strict immigration limits, further heightening market uncertainty. Analysts cautioned that any signs of a more selective approach to tariffs could trigger a dollar correction in the coming weeks.
The crypto world has been rocked by the launch of the “official” Donald Trump memecoin, which skyrocketed in value after its Friday evening debut, briefly reaching a $14 billion market cap.