Cryptocurrencies Bitcoin, Ethereum, and Dogecoin Experience Surge as Market Anticipates Trump-Influenced Growth
Crypto markets bustled on Friday, with Wall Street markets winding down ahead of President-elect Trump's inauguration on Monday. Despite crypto being a 24/7 market, trading volume and liquidity often drop during weekends. Traders are utilizing this last weekend to secure their positions before the new administration takes the reins.
Bitcoin (BTC, up 3.16%) led the charge, seeing a 5.6% surge in the last 24 hours, reaching almost the $105,000 mark. Ethereum (ETH, 2.72%) followed closely with a 2.6% increase, while Dogecoin (DOGE, 9.67%) recorded the largest gain at 7.3%.
Are the floodgates about to burst open?
Rumors circulating in the media suggest President Trump will sign an executive order on Day 1, prioritizing crypto. Details are scarce, but it's likely to involve replacing the current Securities and Exchange Commission chairman with a crypto-friendly regulatory figurehead.
Policy changes in Washington, D.C., move at a slower pace than traders might expect. Any new regulations will likely need approval from Congress, which could create question marks around the value of meme coins and blockchain tokens. Instead, assets such as stocks and bonds are more likely to trade on the blockchain, paving the way for innovative projects like business formation to occur on the blockchain rather than through traditional legal means.
Watching the rubber hit the road
As we move from speculation to action between the election and the inauguration, investors should watch the news closely. If expectations aren't met, gaining momentum in the crypto market could prove challenging. The Federal Reserve lacks the authority to make Bitcoin or any other cryptocurrency a reserve currency without legislation, and given the narrow Congressional majority, this is highly unlikely.
Most inflows from exchange-traded fund investments have already been factored into the market, suggesting that discussion around a crypto reserve or Trump's potential friendliness towards crypto has been priced in.
Instead, long-term investors should keep an eye on the growth of stablecoins. With applications ranging from currency exchanges to online payments, stablecoins represent the true potential of blockchain technology, even if they don't necessarily create value for numerous tokens.
Memes and momentum drive the day
Today's rally in crypto is largely due to speculation about President Trump's crypto-friendly stance. Yet history shows that such speculation can sometimes lead investors astray. In 2021, inflation and hefty budget deficits were often linked to large crypto returns. However, the market crashed in 2022 before eventually recovering.
While I remain optimistic about the future of blockchain technology, I advise caution when purchasing tokens—particularly at this peak. There will likely be better buying opportunities in the future.
In light of the rumors of President Trump potentially prioritizing crypto with a new regulatory figurehead, investors are exploring finance opportunities in the crypto market, aiming to maximize their profits before potential policy changes. However, the lack of clear details and the need for Congressional approval could bring uncertainty to the value of meme coins and blockchain tokens, emphasizing the importance of making informed investing decisions.
