Next year could be a big one for cryptocurrency, especially as President-elect Donald Trump returns to the White House. During his campaign, Trump promoted himself as the “crypto president,” earning the support of many in the crypto community.
Given Trump’s pro-business stance and his promises of regulation reform, many investors are wondering whether now is the right time to get into crypto. Here are four reasons to consider investing in crypto before Trump’s inauguration — and three reasons not to.
With Trump’s pro-crypto stance, many are looking to cryptocurrency as a possible investment ahead of Inauguration Day — and there are some reasons for doing so.
The U.S. government is expected to take a more favorable regulatory posture toward cryptocurrencies during Trump’s administration. We could also see changes in Congress with more pro-crypto legislators who might provide clearer regulation for stablecoins and other digital assets.
The departure of Gary Gensler as the Securities and Exchange Commission chair could reduce the weight of the crypto industry’s regulatory bullseye. Trump has said he plans to nominate Paul Atkins, a known supporter of crypto, as the new chair.
After Trump’s election win, Bitcoin’s price skyrocketed, exhibiting market momentum that could last during his term. Investment into Bitcoin has already greatly increased due to the approval of spot Bitcoin exchange-traded funds early in 2024 — indicating that institutional interest in Bitcoin is growing.
Earlier this month, Bitcoin surpassed the $100,000 mark for the first time — a milestone many have been watching for awhile.
With Trump in office, a more favorable regulatory landscape is expected, and institutional investors, perhaps encouraged, may feel more comfortable going further into the crypto space. This influx of capital could send crypto prices upward, as institutions tend to bring with them large wells of cash and stability.
It could be a self-reinforcing cycle of growth and confidence-building among retail investors if major financial players enter the market.
“The growing integration of bitcoin into mainstream finance through spot ETFs and institutional adoption suggests it could consolidate its position as a legitimate asset class,” John Plassard, senior investment specialist at Mirabaud Group, told Morningstar.
Trump also pledged while campaigning to amass a national Bitcoin stockpile — an approach that matches up with Sen. Cynthia Lummis’ Bitcoin Act to accumulate 1 million Bitcoin over 20 years. If Trump’s administration commits to a national Bitcoin stockpile, Bitcoin could become more legitimate and valuable in the eyes of the world.
As it is, the U.S. could be in a position of strength in the world of digital fiat for the future. Bitcoin accumulation as a means to tackle national debt and inflation could draw revenue from domestic and worldwide investment.
“Because of the way that Bitcoin has been appreciating since inception, this would be an asset that could help shore up the U.S. dollar as the world reserve currency and serve as a reserve that could be used to reduce the national debt significantly,” Lummis said in an interview with CNBC.
What if now isn’t the right time to invest in crypto? Here are three reasons investors may want to consider holding off on investing in crypto prior to Inauguration Day.
Cryptocurrencies are notoriously volatile, with prices capable of swinging dramatically within short periods. This volatility can lead to significant financial losses for investors if they are not careful.
Market crashes can happen unexpectedly, as seen with previous incidents like the collapse of the cryptocurrency exchange FTX in 2022. Such events can wipe out substantial investments rapidly.
Experts recommend investing only what you can afford to lose due to this inherent risk.
While Trump may promise a friendlier regulatory environment, changes in policy can be unpredictable and may not always favor investors. Future administrations or shifts in Congress could lead to stricter regulations that might negatively impact cryptocurrency values.
Unlike traditional investments, such as stocks and real estate, cryptocurrencies do not have tangible backing. This makes it challenging to determine their intrinsic value. Many cryptocurrencies lack proven use cases and may not achieve widespread adoption or acceptance as a viable currency.
While Trump has promised to be a “crypto president” during his next term, it remains to be seen what the full effects will be on the crypto industry — and crypto investments.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
