Cryptocurrency markets began to come alive on Friday, the last trading day on Wall Street before President Trump takes office on Monday. Of course, cryptocurrencies are traded 24/7, but trading volume and liquidity tend to drop on the weekends, so traders are taking final positions before a new administration takes office.
Bitcoin (Cryptocurrency: BTC) As of 12:30 pm ET, it was up 5.6% in the past 24 hours, with the price per token approaching $105,000. Ethereum (Cryptocurrency: ETH) has gained 2.6% over that time, and Dogecoin (Cryptocurrency: DOGE) up 7.3%.
Media reports claim that President-elect Trump will sign an executive order on the first day of his term to make cryptocurrencies a national priority. It’s not entirely clear what that means beyond replacing the current SEC chairman with a more crypto-friendly regulator.
Traders purchasing the token may be surprised by how slowly policy changes are coming to Washington, D.C., and where the changes are coming from. Congress may need to act to make industry rules clearer, but that doesn’t mean memecoins and blockchain tokens will necessarily increase in value. Instead, it means assets such as stocks and bonds can be traded on the blockchain, and more innovations (such as business formation) can take place on the blockchain rather than through expensive legal means.
I think policy changes will broadly benefit cryptocurrencies, but the winner may not be the coin that clearly rallied today.
The period between the election and the inauguration has seen markets speculate on everything from regulation to cryptocurrency reserves in the United States, with investors buying into the rumors. Now, it's time to pay attention to the news.
If the message doesn't live up to lofty expectations, it's much harder to gain momentum. The Federal Reserve cannot make Bitcoin or any other cryptocurrency a reserve currency without congressional approval, which is unlikely to happen given the slim majority that holds these institutions today.
The bulk of inflows into exchange-traded funds since the start of 2024 have also been priced in.
The more likely outcome for cryptocurrencies is some disappointment as the market begins to realize that the next catalyst is yet to come. But for long-term investors, I think the growth of stablecoins in everything from currency exchanges to online payments is worth watching. That's what blockchain is really for; it just doesn't bring value to most coins.
Today’s move was driven by increased speculation that President Trump would be beneficial to the cryptocurrency market. But such speculation has led investors astray before. In 2021, it was believed that inflation and high budget deficits would cause Bitcoin and other cryptocurrencies to surge, but the opposite has actually happened. The market collapsed in 2022 and has only recently recovered.
I think blockchain has a bright future, but I wouldn't buy speculative tokens at this peak. I think there will be better dip buying opportunities in the future.
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Travis Hoium holds a position at Ethereum. The Motley Fool has positions and recommendations on Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
Bitcoin, Ethereum and Dogecoin surge as traders bet on Trump rally Originally published by The Motley Fool