Bitcoin surpasses $89,000: Here's how Trump is making it happen

The US dollar approached a four-month high against major currencies on Tuesday, while Bitcoin continued its unprecedented surge as investors flocked to trades anticipated to benefit from the forthcoming Donald Trump administration.

The euro remained near a nearly seven-month low reached the previous night, while the yuan hovered close to a more than three-month low, with both Europe and China being specific targets for potential tariffs under Trump.

As of 0037 GMT, the US dollar index, which evaluates the currency against six counterparts including the euro, increased by 0.07% to 105.49, following a peak of 105.70 on Monday, marking the highest level since July 3.

The leading cryptocurrency, Bitcoin, reached a new record high of $89,637 (approximately Rs 75 lakh) on Tuesday. Trump has pledged to establish the United States as "the crypto capital of the planet".

Expert-speak

"If history is any guide, Bitcoin could easily finish the year around $100,000," said Kyle Rodda, a senior financial markets analyst at Capital.com. Meanwhile, "the expectation of US economic outperformance and aggressive trade practices from the Trump administration continues to push the US dollar higher," Rodda said, adding, "Markets are dialling back expectations of Fed cuts going forward, with a cut at the December meeting being thrown into question."

Trump's Republican Party is projected to hold a majority in both chambers of Congress when he assumes office in January, according to Decision Desk HQ. This majority would facilitate his plans to implement significant tax reductions and reduce the size of the federal government.

Market expectations for a quarter-point interest rate cut by the Federal Reserve on December 18 have decreased to approximately 65%, down from nearly 80% a week prior, influenced by potentially inflationary tariffs and immigration policies, as reported by CME Group's FedWatch Tool.

How Bitcoin is impacting major currencies

Trump has issued a warning to the eurozone, stating that it will "pay a big price" for insufficient purchases of American exports, particularly targeting the automotive sector. He has also threatened to impose comprehensive tariffs of 60% on Chinese goods.

On Monday, the offshore yuan fell to a low of 7.2337 per dollar, marking its weakest point since August 2, before recovering slightly to 7.2241.

The euro dropped to $1.0629 overnight, reaching its lowest level since April 22, and was last recorded at $1.0658.

The euro is facing additional strain due to political instability in Germany, the largest economy in the eurozone. On Monday, Chancellor Olaf Scholz's coalition partner, the Greens, joined opposition calls for an expedited parliamentary vote, potentially paving the way for a snap election.

The British pound remained relatively stable at $1.28645.

The Japanese yen approached last week's three-month low of 154.715 per dollar, declining by approximately 0.1% to 153.865, following a 0.7% decrease overnight.