Bitcoin: $100k is not a matter of if, but when.

The green wave in the crypto market continues as investors digest a second Donald Trump presidency.

Currently trading at $98,580, Bitcoin has more than doubled since the start of the year, soaring to $99,600 on Saturday, just $400 shy of hitting the $100,000 mark.

The crypto market as a whole has gained approximately $1 trillion since Trump’s election win on Nov 5, while Bitcoin gained over 40% within a similar period.

The president elect’s administration has begun to hold discussions to create a White House post dedicated to regulating digital assets, which would include a potential national strategic Bitcoin reserve or stockpile.

Investors are confident that Trump will “follow through” on his promises and usher in a new golden age for crypto, as his policies favor more inflation and growth - all things that would have a positive impact for Bitcoin.

In ringgit terms, 1 Bitcoin is now worth about RM440,000 and can buy you 10 Premium Proton Sagas, a 6-series BMW, 73 iPhones, or a new apartment in the outskirts of KL. Crazy just how much this Magic Internet Money is worth.

“I’m late. The train has left.”

Unless you’re a trader, there’s really no such thing as “too late” or “too early” when investing. Rather, the question that you should be asking yourself is: am I underexposed or overexposed?

According to RinggitPlus founder Hann Liew, if you have zero percent exposure in Bitcoin and your plan is to invest a little, then the key is to first get off zero.

Conversely, if your portfolio is mainly in BTC due to the recent rally, then it would make sense to rebalance a little to other assets.

This concept does not only apply to Bitcoin, but investing in general.

Gold bounces back and is heading to $3,000/ounce.

In my previous newsletter, I mentioned that gold may retrace due to Trump’s election victory, as he promised to “stop the war” before his inauguration on 6 January 2025.

The precious metal dropped 8.14% to $2,530/ounce after Trump’s win, but the retracement was short lived. Gold has rebounded and is now setting its sights on $3,000/ounce, which Goldman Sachs predicts will be hit by 2025.

On a year to date basis, gold is up by 30.16%.

The gold fever is driven by rate cuts from the Federal Reserve.

The committee has slashed interest rates twice this year, once in August and once more in November, as inflation has shown healthy signs of cooling.

To keep things simple: lower interest rates make borrowing cheaper, allowing more money to flow into the economy.

Combined with Trump’s pro-inflation policies, scarce assets (Gold, Bitcoin, Silver, etc.) are likely to continue their upward momentum.

Central banks around the world are buying up gold.

The Ukraine-Russia war taught global central banks a valuable lesson: if your reserves are mainly in US dollars, the Americans could unilaterally freeze your assets, thereby locking your country out of its own “emergency funds”.

This was exactly what happened to Russia in 2022 when Putin sent troops to invade Ukraine.

The US and its allies blocked $300 billion of sovereign Russian assets in the West in an effort to deter Putin from escalating the war.

Fearing this risk, central banks (most notably China, India, France, Singapore, and Russia) have been aggressively buying gold to reduce their reliance in the US dollar.

In the past two years, China has increased its gold reserves by almost 16% to 2,226 Tonnes, worth $214 billion.

Ringgit retraces to RM4.46 - HLIB targets RM4.50 by year-end.

The ringgit’s impressive run has come to an end.

After rocketing 15.1% to RM4.0940 in less than 3 months, the local note reversed course and plunged to RM4.4650 on Friday. In the past two months, it has depreciated by 8.26%.

Hong Leong Investment Bank expects the ringgit to weaken further to RM4.50 by the end of the year, but MIDF believes that the local note will rally to RM4.03. You don’t need to be a mathematician to understand which prediction is more realistic.

The biggest reason for the retracement in the ringgit is due to Trump’s victory.

The president elect is planning to impose nearly 40% tariffs on all imports from China as part of his "America First" trade measures.

This will potentially slice its growth by up to 1%, worsening its already wobbly economy due to the prolonged property downturn, debt risks, and weak domestic demand.

Any blow to the Chinese economy will spillover to ASEAN countries that depend on Chinese consumption, export demand, and tourism.

Malaysia will definitely be in the crossfire because China has been our largest trading partner for 13 consecutive years.

Our exports to China amounted to US$47,843 million in 2022, with a partner share of 13.58%.

According to a World Bank estimate, a 1% slowdown in China’s gross domestic product will translate to a 0.8% decline for Malaysia.

Another big reason for the ringgit retracement is due to net outflows from our local stock market.

Last week, foreign investors continued to sell equities on Bursa Malaysia for the fourth consecutive week, totaling -RM259.8 million.

In November, they net sold a combined total of -RM720 million.

As a result, the FBMKLCI gave up most of its gains in the past three months. Previously the second best performer in SE Asia, the index has now dropped to the 6th place.

Major stocks Maybank (RM10.20), Public Bank (RM4.40), and Tenaga (RM13.94) have all retraced 7-9% from their 2024 highs.

However, despite the recent weakness, the FBMKLCI is still up 9.47% since the start of the year.

Another reason for ringgit weakness: dollar strength.

The dollar has gained 6.53% in the past two months, which translated to a similar movement in the USDMYR pair.

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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.