Donald Trump's election as the new president of the United States became the biggest political and economic topic of November. Not surprisingly, the impact of Trump's rise to power has been enormous, with his "Trump 2.0" economic policy line, which is different from other parties, and strong support for cryptocurrency, reversing the market's previous trading logic. Stock market liquidity is starting to flow to more zones, and the encryption market carnival is also closely related to Trump, all of which seem to indicate that a new trading logic system is being born.

With the end of the U.S. presidential election, Trump was re-elected as the 47th President of the United States. At this point, the election has come to a conclusion, and the United States will return to a right-wing development path, alleviating global traders' concerns about election risks.

As a conservative in the traditional sense, the Republican Party advocates cutting taxes, reviving the manufacturing and traditional energy industries, cutting government regulatory powers, deporting illegal immigrants, etc., and "Trump 2.0" implements the policy philosophy of the "MAGA Party".

From the perspective of policy thinking, Trump's policy thinking is very similar to that of Reagan's, both are the policy combination of 'loose fiscal policy + deregulation + trade protectionism'. Reagan led the United States out of the economic environment of stagflation after the oil crisis, and promoted economic recovery with this thinking, ultimately achieving the 'Reagan economic cycle' and continuing to influence subsequent US economic policies. Whether Trump can replicate the 'success' path of President Reagan at that time, bring the US economy back from the edge of stagflation, and become the most eye-catching focus during his term, remains to be seen.

The similarity between Trump's policy and Reagan's policy could be the main trading logic for the subsequent "Trump trade," and investors can continue to follow.

Returning to November's inflation data and Fed policy. On November 26th, local time, the Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) meeting on November 6th to 7th. The minutes showed a 25 basis point rate cut in November, in line with expectations. At the same time, the Fed emphasized that "participants expect that if the data remain consistent with their outlook, the Committee will continue to gradually move toward a more neutral policy stance as long as the economic expansion remains on track, with the goal of sustaining the economic expansion and keeping inflation near the Committee's symmetric 2 percent objective over the medium term." This "more neutral policy stance" means that the Fed will no longer deliberately pursue rate hikes or cuts, but will make daily adjustments based on market conditions, which undoubtedly implies the Fed's optimistic expectations for the U.S. economy to emerge from recession and recover in the future.

U.S. stocks ran smoothly in November, breaking through record highs in small steps. In the field of AI, although Nvidia's third-quarter earnings report exceeded expectations, it did not "exceed expectations", resulting in a 5% after-hours decline on the day of the earnings report. The current attitude towards AI seems to be "as long as it doesn't explode, it's not as expected".

Since Trump's election, BTC has been like a wild horse, heading straight for $100,000. The market's fear of missing out was severe until the last week of November when it eased slightly. Against the backdrop of Trump's call for a 'BTC strategic reserve', Pennsylvania became the first state to pass the 'BTC Rights Bill', and the market seems to be ushering in the 'Trump era' of cryptocurrency. Cryptocurrency is becoming the object of legislative protection in the traditional world and is truly entering everyone's life.

If Trump's election brought BTC to new highs, then Musk ignited the MEME track completely. With Musk joining the 'Trump 2.0' government team, there were once 3 Musk concept coins violently rising. The more long-term narrative behind this episode is that Musk, as a leader in technological innovation, his potential political influence may accelerate the progress of encryption technologies, such as promoting the integration of AI and blockchain.

Therefore, Cryptocurrency deserves to replace AI as the new darling of the stock market in November, and people naturally seek opportunities related to Cryptocurrency in the secondary US stock market. Among the BTC frenzy in November, the biggest winner that emerged was MicroStrategy (MSTR) - MicroStrategy's stock price in November increased by more than 140%.

Source: StockCharts.com

MicroStrategy was originally a niche software company founded in the 1990s. After surviving the technology bubble in 2000 and entering a period of stable business, it had little room for further growth. It wasn't until the company's CEO, Michael Saylor, became a Bitcoin believer around 2020 that BTC was incorporated into the company's balance sheet as a core strategy. He successfully built a trap for his own 'BTC-driven' company growth logic: BTC has a significant proportion in the company's assets, and its fluctuation directly affects the company's value. As BTC prices pump, the MicroStrategy stock price rises significantly due to the increase in assets. With daily trading volume surpassing Nvidia, the company can issue more shares to raise funds for further Bitcoin purchases through leveraged capital operations. In November, MicroStrategy issued additional shares to raise $4.6 billion, which were all reinvested in BTC, driving BTC prices to pump. This forms a cycle of buying BTC - stock price pump - issuing more shares or debt to buy more BTC, closely linking shareholder interests with BTC appreciation. The unexpected surge in MicroStrategy's stock price is essentially due to some investors viewing it as an indirect way to hold BTC and being willing to pay a premium for it.

BTC has achieved MicroStrategy, and MicroStrategy has also achieved BTC. Its crazy issuance of debt and selling of stocks to buy coins, as well as its high-profile market style, have helped push BTC from 70,000 to 90,000, just as the previous BTC ETF helped push BTC from 40,000 to 70,000. Therefore, MicroStrategy is also considered the biggest promoter of this phase of BTC's rise from 70,000 to 90,000.

Some investors believe that MicroStrategy has cleverly discovered a method that exploits the loopholes in the Fiat Currency system, taking full advantage of the inefficiencies of the traditional Capital Market, and then combines it with the predictability of BTC, giving itself significant pump potential. In short, it is using cheap and constantly inflating capital to acquire scarce and appreciating assets. Of course, the premise of this logic is the assumption that BTC will inevitably succeed in the long term. As of the latest data, MicroStrategy currently holds 279,420 BTC.

MicroStrategy's 'digital gold standard' strategy and capital operation model provide us with a new experimental paradigm. If the market conditions continue to improve, this model may become an industry pioneer, guiding other companies to adopt similar strategies, accelerating the popularization of BTC on corporate balance sheets, and driving BTC to be recognized as the top predator of assets.

The soaring market has already caused retail investors to dump BTC and pursue so-called meme coins for high returns. Currently, BTC is the main battlefield for Whales. Some believe that the biggest risk for BTC now comes from the dumping of Whales. As one of the largest Whales, MicroStrategy's biggest risk of dumping comes from the forced liquidation of bonds due to a drop in BTC price, which leads to a self-reinforcing downward spiral of BTC price.

However, this argument overlooks the bond structure of MicroStrategy. The bonds issued by MicroStrategy are convertible bonds, which belong to off-exchange leverage. Even if MicroStrategy cannot repay the debt on the repayment date after three years, the bondholders can only convert the debt into stocks and dump them in the stock market, which cannot shake the price of BTC. Therefore, instead of worrying about MicroStrategy being forced to liquidate and sell coins to repay the debt, it is better to worry about those who buy MicroStrategy stocks in the US stock market.

Investor Victor Dergunov has explicitly pointed out that although MicroStrategy has demonstrated forward-looking vision, its stock is clearly in an overbought state, which can be seen as a typical bubble in the encryption field. Although BTC is far from its peak, reality has sounded the alarm, reminding us of what happens when the market heats up too quickly. The market's valuation of MicroStrategy will reach a more definite consensus, and this valuation is likely to be significantly lower than the current level.

Of course, a more anticipated future is that we may see Bitcoin take its place on the balance sheets of thousands of companies, and then MicroStrategy will be recorded in history as a financial pioneer.

In November, against the backdrop of Trump's election as US president, the economy has undergone multidimensional changes. The FOMC meeting reduced interest rates by 25 basis points, and it is highly likely to continue easing in December, injecting liquidity expectations into the economy. Trump's economic team is being formed and his policy proposals are expected to replicate the previous high-growth path of the economy. The US stock market continues to rise to new highs, and the encryption market is celebrating under the favorable conditions of Trump. BTC is approaching $100,000, and MicroStrategy has emerged strongly due to BTC holdings and the exploration of new capital operations. Looking ahead, we need to follow the implementation strength and pace of Trump's policies, as well as the impact of interest rate cuts on the economic structure. If Trump's commitments to the encryption industry are partially realized, $100,000 may not be the end point of BTC price, but only a milestone in its pumping process. The road is tortuous, but the future is bright.