2024 has been a stellar year for the markets, particularly Bitcoin.

The flagship cryptocurrency has continued to rally, achieving a historic high of $104,500 on Thursday, fulfilling the dreams of crypto enthusiasts.

It up 136% on a year to date basis, fueled by Donald Trump’s presidential victory, the Federal Reserve cutting interest rates, and increased adoption (ie. listing of Bitcoin ETFs).

Speaking of ETFs, institutional funds now collectively hold more than 1.1 million Bitcoins (or 5.24% of the total supply), worth $110 billion. These funds are issued by well known US asset managers such as BlackRock, Fidelity, and Grayscale.

Bitcoin’s growth has far outpaced traditional asset classes this year. At a market capitalization of RM8.75 trillion, it is almost five times larger than the Malaysian stock market, which “only” has a market cap of RM1.80 trillion.

That said, all markets across the board are firmly in green, and though the FBMKLCI has retraced by 4-5% in the past 3 months, it is still up by 11.30% on a year-to-date basis.

Therefore, as long as you stay invested in any of these assets since January, your investments would be up by quite a significant margin right now.

Will the rally continue?

With Trump winning the presidency and his policies coming into effect on 6th January, analysts firmly believe that 2025 will be positive for the markets, mainly the US.

Being a businessman, Trump supports growth, inflation, tax cuts for corporations, and a stronger dollar. However, some of his policies are contradictory according to economists.

You see, for the US stock market to perform, interest rates are “supposed” to be slashed and kept low. This is to reduce borrowing costs and allow more money to flow in the economy, which would in turn reduce the strength of the dollar.

Therefore, Trump’s aspirations for a stronger dollar is simply not logical in this sense.

Regardless, analysts are looking at these few sectors to perform during Trump’s second term in 2025:

Trump’s questionable tariffs will hurt the Chinese economy and backfire on the US.

As part of his “America First” economic policy, Trump has pledged to slap a 25% tariff on all goods imported from Mexico and Canada, as well as an “additional” 10% tariff on Chinese products.

Tariffs are an additional tax levied on imported goods into a country. So, a car imported to the US worth $50,000 with a 30% tariff would face an extra $15,000 charge.

Last week, Trump also threatened to impose 100% tariffs on BRICS nations that are planning to move away from the US dollar.

“They can go find another sucker,” he tweeted.

However, Trump’s perspective on this matter is quite misleading.

Tariffs are actually paid by the domestic company importing the goods, not the foreign company. So, in that sense, it is a straightforward tax paid by local US firms to the US government.

China has criticized Trump for his tariff threat, stating that it won’t solve America’s problems. The Chinese media warned that new duties could drag the world's top two economies into a mutually destructive tariff war.

Bitcoin could top $200,000 in 2025, if Trump keeps his promises.

The president elect has promised to provide more supportive regulation on crypto and wants to create a national strategic Bitcoin reserve.

This is the main reason for Bitcoin breaching $100,000 this year, but for the rally to continue through 2025, Trump has to “adhere” to his promises.

On Friday, Trump appointed David O. Sacks, the founder of Yammer and former COO of PayPal, as the new “White House A.I. and Crypto Czar.” He will be responsible for shaping the policies in two emerging sectors: artificial intelligence and crypto.

This announcement reflects Trump’s ongoing advocacy for cryptocurrency, a theme prominent throughout his election campaign.

“Everything is at an all-time high. What’s the strategy to invest right now?”

If you attended our session on “The Fundamentals of Financial Planning” with Hann Liew on Thursday, you would know that there’s no such thing as “too high” or “too low.”

The key is to fix a percentage for each asset within your portfolio, then rebalance accordingly.

One of the ways to determine the percentages is by using the Rule of 100. You take 100 and deduct it with your age - that is the percentage of risky assets (ie. stocks, crypto, etc.) that you should allocate for your retirement.

Let’s say your portfolio is currently 100% in conservative assets (ie. ASB, ASM, EPF, etc.) and you want to adjust it to a 70/30 portfolio: 70% risky assets, 30% safe assets.

Rather than immediately adjusting to the ratio (which is quite scary for a new investor), you should give yourself 12 months and gradually DCA (Dollar Cost Average) into each of these assets.

In this case, enter 1-2% in BTC, 1-2% in the US market, 1-2% in x market, and so on every month, so that by the end of the year, your portfolio will be to your liking.

“What if I’m in profit? How do I take profits knowing that markets may go higher?”

This is the other side of the coin that many people are facing right now.

Imagine you invested Bitcoin back in 2017 and now it has effectively 10x-ed. Your portfolio now mainly comprises of BTC (ie. 90%).

In this case, you should rebalance your portfolio into other assets. But if you feel guilty on taking profits too “early”, then you should ask yourself these two questions:

• How would I feel if BTC drops to $55,000 over the next few months?

• Would I regret not taking profits then?

This mindset can be applied to all your investments, not just Bitcoin. According to Hann, it should give you a better idea on rebalancing your portfolio.

Watch the full replay of Hann’s session here (only for patrons): https://www.patreon.com/posts/full-replay-of-i-117420739?utm_medium=clipboard_copy&utm_source=copyLink&utm_campaign=postshare_fan&utm_content=web_share

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That’s all for this week’s newsletter!

Disclaimer: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.