Next year could be a significant one for Bitcoin, especially with President-elect Donald Trump returning to the White House. During his campaign, Trump marketed himself as the “crypto president,” gaining the backing of many in the cryptocurrency industry.
Is Now the Time to Invest in Cryptocurrency?
Given Trump’s pro-business approach and promises of regulatory reform, many investors are questioning if now is the time to go into cryptocurrency. Here are four reasons to consider investing in cryptocurrency before Trump’s inauguration—and three reasons not to.
The Case for Cryptocurrency Investment
With Trump’s pro-crypto position, many people are considering bitcoin as an investment option ahead of Inauguration Day, and there are several good reasons for doing so.
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Promised Regulatory Clarity
During Trump’s presidency, the US government is expected to adopt a more favorable regulatory approach to cryptocurrencies. We could also see changes in Congress, with more pro-crypto members potentially providing clearer legislation for stablecoins and other digital assets.
Gary Gensler’s retirement as chair of the Securities and Exchange Commission may lighten the regulatory burden on the cryptocurrency business. Trump has stated that he intends to select Paul Atkins, a renowned advocate of cryptocurrency, as the new chair.
Following Trump’s election victory, Bitcoin’s price surged, indicating market momentum that could endure throughout his administration. Investment in Bitcoin has already surged significantly as a result of the introduction of spot Bitcoin exchange-traded funds early in 2024, demonstrating that institutional interest in Bitcoin is expanding.
Bitcoin hit the $100,000 barrier for the first time earlier this month, a milestone that many had been anticipating for some time.
Institutional Investment Growth Expected
With Trump in office, a more favorable regulatory picture is predicted, and institutional investors, perhaps encouraged, may feel more comfortable venturing deeper into the cryptocurrency industry. This flood of capital has the potential to drive up cryptocurrency prices, as institutions often bring enormous amounts of cash and stability.
If major financial players enter the sector, it might set off a self-sustaining cycle of expansion and confidence among regular investors.
“The growing integration of bitcoin into mainstream finance through spot ETFs and institutional adoption suggests that it could consolidate its position as a legitimate asset class,” said John Plassard, senior investment specialist at Mirabaud Group, to Morningstar.
Strategic National Bitcoin Stockpile
Trump also committed throughout his campaign to build a national Bitcoin stockpile, which aligns with Sen. Cynthia Lummis’ Bitcoin Act, which aims to gather 1 million Bitcoin over 20 years. If Trump’s administration commits to establishing a national Bitcoin stockpile, Bitcoin may gain legitimacy and value in the eyes of the world.
As things stand, the United States may be in a strong position in the realm of digital fiat in the coming years. Bitcoin accumulation as a strategy of addressing national debt and inflation may generate revenue from domestic and international 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 told CNBC during a telephone interview.
Reasons to Hold Off on a Crypto Investment
What if now isn’t the ideal time to invest in cryptocurrency? Here are three reasons why investors should reconsider investing in cryptocurrency before Inauguration Day.
High Volatility in Cryptocurrency Markets
Cryptocurrencies are typically volatile, with prices moving wildly over short periods of time. This volatility might result in huge financial losses for those who are not cautious.
Market crashes can occur unexpectedly, as evidenced by past instances such as the collapse of the cryptocurrency exchange FTX in 2022. Such catastrophes have the potential to quickly deplete considerable investments.
Experts advise investing just what you can afford to lose because of the inherent risk.
Regulatory Uncertainty Remains a Risk
While Trump promises a lighter regulatory environment, policy changes are unpredictable and may not always benefit investors. Future administrations or movements in Congress may result in harsher regulations, which might have a detrimental influence on bitcoin valuations.
Lack of Tangible Assets in Cryptocurrency Investments
Unlike traditional investments like stocks and real estate, cryptocurrency lack actual backing. This makes it difficult to calculate their intrinsic value. Many cryptocurrencies lack established use cases and may not gain widespread adoption or recognition as a viable currency.
Final Thoughts on Crypto Investment Under Trump’s Presidency
While Trump has promised to be a “crypto president” during his second term, it is unclear what the entire impact would be on the crypto industry—and crypto investments.
Editor’s Note on Political Coverage
GOBankingRates is nonpartisan and seeks to cover all elements of the economy honestly, including providing fair views on politically charged finance matters. This topic is covered in further depth at GOBankingRates.com.
