Bitcoin reaches new peak as markets ride Trump election momentum

The dollar surged and bitcoin hit a record high on Wednesday while most equity markets advanced as traders bet on a victory for Donald Trump as early results for the US presidential election rolled in.

While polls have shown the race for the White House on a knife edge, the Republican appeared to be faring better than his Democratic opponent Vice President Kamala Harris in early projections.

Both candidates have picked up expected wins in safe states, but indications that the business tycoon was edging it boosted the so-called Trump Trade.

Signs that the former president' s party was notching up better results in Congressional races boosted the prospect of sweeping tax cuts, more tariffs and deregulation — seen as a boost for the greenback.

The dollar jumped 1.5 percent to 154.33 yen, its highest since July, while it was also up more than one percent against the euro and more than two percent against the Mexican peso.

Bitcoin piled almost $6,000 higher to a record $75,005.06, topping its previous peak of $73,797.98 in March.

Bitcoin capital

Trump has pledged to make the United States the "bitcoin and cryptocurrency capital of the world" and to put tech billionaire Elon Musk in charge of a wide-ranging audit of governmental waste.

While the key swing states were too close to the project, early tallies suggested Trump was ahead in Georgia, while traders were keeping a close eye on other incoming results.

"The price of bitcoin has closely followed Trump's position in the polls and on betting markets," Russ Mould, an analyst at AJ Bell, said ahead of Tuesday's US election.

Investors are "potentially taking the view that a Republican victory would lead to a surge in demand for the digital currency", he added.

Analysts said a ttention was also on Congressional races, adding that a clean sweep for Trump and Republicans would likely boost the dollar and Treasury yields owing to his plans to cut taxes and impose tariffs on imports.

Changing the tax policy

Republican control of the Senate and House "could bring sweeping spending or tax policy shifts. Still, congressional gridlock could be the ultimate volatility suppressor", said SPI Asset Management's Stephen Innes.

Such an outcome for the Republicans could provide a headache for Federal Reserve boss Jerome Powell as he continues his battle to bring inflation to heel, with Trump's plans considered inflationary.

The election comes as the central bank prepares to deliver its latest policy decision Thursday amid expectations it will cut interest rates by 25 basis points, having lowered them by 50 points in September.

The dollar's surge against the yen rallied stocks more than three percent in Tokyo thanks to gains in exporters, while Shanghai, Sydney, Singapore, Wellington, Taipei, Mumbai and Jakarta also rose. There were losses in Seoul, Manila and Bangkok.

Hong Kong dived more than two percent on worries about the impact of a Trump presidency on China's economy and relations between Beijing and Washington.