• Bitcoin reached a record high due to speculation on assets likely to benefit from Trump's election victory.
• The euro is under pressure due to potential tariffs, while the dollar is expected to benefit from policies maintaining higher U.S. interest rates.
• Asian markets reacted to Trump's victory with a slight downturn, while Japan's Nikkei was up due to a weak yen.
• Despite market volatility, Bitcoin's rally is predicted to continue, targeting $100,000 next.

Asian markets experienced a slight downturn on Tuesday, with the dollar maintaining its four-month high. However, the spotlight was firmly on Bitcoin, which reached a record high, driven by investor speculation on assets likely to benefit from Donald Trump's election victory.

The anticipation of Trump's second term in office, expected to bring tax cuts and looser regulations favorable to equities, has propelled Bitcoin, the world's most prominent cryptocurrency, to an all-time high of $89,637.

However, the potential imposition of tariffs by the new White House administration has put the euro under pressure, pushing it to near seven-month lows of $1.0687 overnight. In contrast, the dollar is expected to benefit from policies likely to maintain relatively higher U.S. interest rates for a more extended period.

The dollar index, which measures the greenback against six peers, was at 105.57, just short of the four-month high reached on Monday.

Vasu Menon, managing director of investment strategy at OCBC, noted that Trump's decisive victory and the Republican party's win removed the uncertainty of a contested U.S. election outcome.

However, he warned that the medium-term outlook could become cloudier if Trump pursues aggressive tariff hikes, which could fuel inflation and prevent the Federal Reserve from cutting rates. Tariffs also carry the risk of retaliation from major trading partners.

Market Reactions and Projections

Despite these concerns, Menon stated that Trump's victory has, for now, unleashed the animal spirit in markets. Data provider DDHQ projected on Monday that Trump's Republican Party had won a majority in the U.S. House of Representatives, signaling a majority for Republicans in both chambers of Congress.

Asian markets reacted to this news with MSCI's broadest index of Asia-Pacific shares outside Japan down 1%, with Taiwan shares sliding 2% and South Korean stocks 1% lower. Chip stocks in the region have been reeling this week after Reuters reported that the U.S. ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in AI applications.

In contrast, Japan's Nikkei was up 0.5% on a weak yen, which was hovering close to more than three-month lows and last fetched 153.93 per dollar. Wall Street's main indexes notched record high closes overnight, with Tesla gaining around 9% after touching $1 trillion in market value on Friday on bets that the automaker would benefit from CEO Elon Musk's backing of Trump.

Bitcoin Rally and Future Predictions

Trump's victory and the election of pro-crypto candidates to Congress have supercharged a bitcoin rally to record highs closer to 90,000, and targeting $100,000 next. It was last at $88,709. Manish Kabra, lead U.S. equities & multi-asset strategist at Societe Generale, believes that these trades still have plenty more legs, despite their impressive performance.

Chinese shares inched higher, while Hong Kong stocks slid 1%. Sentiment remained largely downbeat after Beijing's latest stimulus package failed to deliver the direct spending aimed at consumers that investors have been expecting.

On the macro side, investor focus will be on U.S. consumer price inflation data on Wednesday, with a parade of Federal Reserve speakers also due to speak this week, including Fed Chair Jerome Powell on Thursday.

In commodities, oil prices were little changed in early trading as China's stimulus plan and oversupply concerns took the wind out of markets in prior sessions. Brent crude futures were at $71.88 a barrel, up 0.06% while U.S. West Texas Intermediate crude futures inched 0.09% higher to $68.10 a barrel.

Spot gold was steady in Asian hours at $2,624 per ounce after touching its lowest level in a month on Monday.