🪙 Another bitcoin boom

What’s going on here?

A post-election rally pushed bitcoin past the $80,000 mark for the first time ever on Sunday.

What does this mean?

The US election outcome last week sparked some big moves in markets – with stocks, the greenback, and bond yields all rocking higher on expectations about tax cuts, tariffs, and looser regulations. But one particular asset has stolen the show: bitcoin. By Sunday, the OG crypto had shot almost 20% higher since Americans headed to the polls, as traders bet on the president-elect’s support for digital assets and the prospect of friendlier regulation for the sector.

Why should I care?

For you personally: Party atmosphere.

This crypto celebration could go on for a while. Case in point: on one particular investment platform, traders have already amassed a nearly $3 billion bet that bitcoin will soon top $90,000. But before you throw on a party hat, remember Warren Buffett’s classic advice about following the crowd: “Be fearful when others are greedy, and greedy when others are fearful”. Or just bear in mind that the president-elect – though on board with crypto now – has a history of shifting his stances. During his first term in the White House, for example, he called bitcoin “a scam”.

The bigger picture: Strong stats for a rookie.

The size of BlackRock’s bitcoin exchange-traded fund (ETF) jolted higher last week, flying past the investment giant’s gold fund, with a record one-day influx of $1.1 billion in new money on Thursday. It’s a stunning addition to the fund’s already spectacular year: investors have now poured over $27 billion into the ETF since its January launch – making it the world’s fourth best-performing fund in terms of inflows this year.

What’s going on here?

China exported far more goods than it imported during the first ten months of the year, leaving the world’s second-biggest economy with a record $785 billion trade surplus.

What does this mean?

That’s a 16% jump from the same period last year, and it leaves China on the verge of recording a $1 trillion surplus for 2024, according to Bloomberg. And you can’t even blame inflation for the increase: Chinese export prices have actually been falling. Needless to say, none of this has been going down well with the US and Europe, both of which have been vocal about the fact that China has been shipping out way more goods at way lower prices than it’s been importing from its trading partners. They’ve accused the country of flooding the market with cheap goods, a practice known as “dumping”. And the US and Europe aren’t the only economies with this beef: China has sold more goods than it’s bought from nearly 170 other places this year – the most since 2021.

Why should I care?

Zooming in: No such thing as coincidence.

The export boom didn’t just happen. See, Chinese consumer spending has been sluggish, weighed down by some economic troubles and a real estate crisis that has folks feeling poorer. To help offset that spending weakness and keep closer to its growth target for the year, Chinese authorities have encouraged more output from the country’s manufacturing sector – in other words, more exports. And that overproduction has now riled the country’s trading partners, who are threatening hefty import taxes on Chinese goods as a result.

The bigger picture: Pie in the sky.

Adding to the country’s worries is the fact that the US president-elect has said he’ll impose a 60% tariff on all Chinese goods. And if that happens, China’s economic growth could fall to just 3%, according to a recent analysis by Standard Chartered and Macquarie. That would make the country’s official growth target of “around 5%” seem like little more than a pipe dream.