Markets surged as investors anticipated Republican control of both houses of Congress, fueling hopes for deregulation, tax cuts, and a business-friendly environment. Small-cap stocks soared 5.8% on expectations that Trump’s protectionist policies would bolster domestic companies. Banking stocks also rallied, buoyed by speculation about lighter regulation and lower corporate taxes.

Key Market Highlights: Volatility Dips: The VIX, often dubbed Wall Street’s “fear gauge,” saw its steepest drop since August, reflecting reduced market uncertainty. Broad-Based Gains: The Dow Jones Transportation Average hit a new high, confirming the industrial sector’s strength. This synchronization is viewed as a bullish signal under Dow Theory. Sector Performances: Insurers: Medicare-focused insurers climbed on expectations of higher government payouts for private Medicare plans. Tech and Megacaps: The “Magnificent Seven” tech giants hit record highs, with Tesla leading the pack, surging 15%. Trump Media: Trump Media & Technology Group jumped 5.8%. Treasury Yields and Currency Moves:

Treasury yields rose sharply, with the 10-year yield increasing by 17 basis points to 4.44%, as investors reassessed the likelihood of near-term Federal Reserve rate cuts. The dollar had its strongest day since 2022, rising 1.3% against a basket of currencies. The yen fell significantly, while the euro slid 1.8%. Meanwhile, the Mexican peso recovered after an initial plunge of 3.5%.

Bitcoin’s Surge

Commodities faced pressure, with gold and copper declining, and oil prices edging lower. In contrast, Bitcoin hit an all-time high, driven by Trump’s pro-crypto stance during his campaign, reinforcing its status as a “Trump trade.”

Source: Brave New Coin Bitcoin Liquid Index

Meanwhile, the Bitcoin ETFs are set to record record inflows this week. Bloomberg analyst Eric Balchunas wrote on X, “$IBIT just had its biggest volume day ever with $4.1b traded. For context that’s more volume than stocks like Berkshire, Netflix or Visa saw today. It was also up 10%, its second best day since launching. Some of this will convert into inflows likely hitting Tue, Wed night”

Source: X

For context, the group of Bitcoin ETFs did $6 Billion in total volume, their best day since their launch month. Most of the stock market ETFs did twice their average. As Eric says, “Just an all-around banger day for an infant category that never ceases to amaze.”

Source: X

Finally, technical analyst Peter Brandt says the bull run is just getting started, writing on X, “Bitcoin $BTC is now in the sweet spot of the bull market halving cycle that should top in the $130k to $150K range next Aug/Sep. I measure cycles differently than most.”

Source: X