“Liberation Day” – the day Donald Trump officially took office

Background of the event

Donald Trump, after winning the US presidential election on November 5, 2024, quickly became the focus of global investors. During his campaign, he made a series of commitments related to cryptocurrencies, including making the US the “crypto capital of the world”, establishing a national Bitcoin reserve fund, and reforming regulatory agencies such as the SEC to support the blockchain industry. These statements pushed the price of Bitcoin to a record high of $ 109,000 on the day of Trump's inauguration, reflecting the high expectations from the crypto community.

However, before his inauguration, global financial markets were already in turmoil. Trump called January 20, 2025, “Liberation Day,” implying that he would issue a series of executive orders to reverse the policies of the Joe Biden administration, especially in the fields of finance and trade. Plans to impose sweeping import tariffs and withdraw from international agreements such as the Paris Agreement have raised concerns among investors about the risk of trade wars and a global economic recession.

Detailed event analysis

1. Market sentiment before inauguration day

In the weeks leading up to “Emancipation Day,” global financial markets experienced volatility. The dollar surged after Trump’s victory, peaking in early January 2025, on hopes for “America First” economic policies such as corporate tax cuts and increased domestic manufacturing. However, this optimism was quickly replaced by anxiety when Trump announced plans to impose import tariffs on goods from China, Canada, and other countries, raising the prospect of a trade war.

In the cryptocurrency space, Bitcoin and major altcoins such as Ethereum, Solana, and XRP have seen strong growth since the election, thanks to Trump’s public endorsement. However, the lack of clarity on Trump’s specific policies has caused the crypto market to waver. Many investors are concerned that if Trump fails to deliver on commitments such as a Bitcoin reserve fund or SEC reforms, the market could face a major correction.

2. Important developments before and after inauguration day

• Controversial trade policy: Trump has vowed to impose import tariffs to protect the US economy, but the move has sparked negative reactions from major trading partners. China and Canada have warned of retaliation, while stock indexes like the S&P 500 and Nasdaq have been volatile. The S&P 500 peaked on January 23, 2025, but then fell sharply when Trump formally imposed the tariffs.

• Cryptocurrency and Trump's Expectations: Trump reaffirmed his commitment to the Bitcoin reserve fund at the New York Stock Exchange opening event on December 13, 2024, setting a target of bringing the price of Bitcoin to $150,000 early in his term. However, Trump did not mention cryptocurrency in his inaugural speech, causing the price of Bitcoin to fall from $109,000 to $102,000 shortly after.

• The boom and bust of the Trump memecoin: The Trump family capitalized on the wave of support to launch two memecoins on the Solana blockchain: $TRUMP and $MELANIA. $TRUMP peaked at $75 with a $15 billion market cap just before inauguration day, but then plummeted to $32.45 on January 21, 2025, down 83.4% from its peak. The collapse reflected market sentiment as Trump failed to signal a positive tone for crypto in his inaugural address.

3. Impact on financial markets

• Cryptocurrency Market:

  
  Trump’s endorsement sparked a strong rally in Bitcoin and altcoins in the run-up to his inauguration. However, Trump’s failure to mention crypto in his inaugural address caused confusion. Bitcoin fell 5.6% immediately after the event, while the memecoin $TRUMP suffered heavy losses. This shows that the crypto market remains sensitive to political signals and is susceptible to speculative sentiment.

• Stock market:

  US stock indexes such as the S&P 500 and Dow Jones recorded their best first nine trading days since Barack Obama's second term, thanks to expectations of Trump's tax cuts. However, the tech-heavy Nasdaq index was less volatile due to concerns about the impact of tariffs on global supply chains.

• USD and commodities:

  
  The US dollar weakened after peaking in early January 2025 on trade war concerns. Gold prices rose to an all-time high, while oil prices fell on expectations of weakening global demand amid economic uncertainty.

Consequences and prospects

1. Short term: Prolonged volatility

In the short term, global financial markets may continue to face volatility. Trump’s tariff policies caused Bitcoin to fall to $78,000 in late February 2025, and the risk of a trade war remains a major threat. However, some positive moves, such as the SEC dropping lawsuits against major crypto companies (Coinbase, Kraken, etc.), may provide hope for the crypto industry.

2. Long term: Opportunities and challenges

• Opportunity: If Trump follows through on his pledge to create a national crypto reserve, as he announced on March 2, 2025 (including XRP, SOL, ADA, Bitcoin, and Ethereum), the crypto industry could enter a new phase of growth. Bitcoin’s price rebound to $89,000 after the announcement suggests that the market still has high hopes for Trump’s policies.

• Challenges: However, Trump’s tough trade policies could trigger a global recession, negatively impacting both crypto and traditional financial markets. Additionally, memecoins like $TRUMP and $MELANIA, which are tied to the Trump family’s reputation, could continue to be highly volatile and pose high risks to investors.