by Bitcoin’s value has surged post-election, extending a surge as President-elect Donald Trump pledges to boost cryptocurrencies. Wealth advisers and personal finance experts advise investors to dip into the market, not dive headfirst. Samuel Deane, CEO of Deane Wealth Management, believes the incoming administration’s pro-crypto stance can change at any time.
Bitcoin’s price reached $100,000 for the first time, indicating investors anticipate a reshaping of industry regulations. Trump credited David Sacks for the milestone and appointed Paul Atkins as the Securities and Exchange Commission’s lead, acknowledging the importance of digital assets and innovations in making America greater.
Bitcoin investor Deane advises investors to understand the basics of the decentralized digital currency, including its volatility. He advises clients to establish guardrails and understand the fluctuating value of bitcoin, as its price has risen from $43,000 in January to $17,000 two years ago.
Lee Baker, founder and president of Claris Financial Advisors, warns investors about the rapid ups and pullbacks in the cryptoverse, particularly in bitcoin and other coins like XRP. He advises first-time investors not to allocate more than 2% of their portfolios to bitcoin due to its surge following Trump’s victory.
Bitcoin-based exchange-traded funds, such as Grayscale Bitcoin Trust, can help limit direct risk. However, Federal Reserve Chairman Jerome Powell has expressed skepticism about bitcoin, stating it is still treated as a speculative asset. Goldman Sachs’ report suggests that gold is not being used as a payment or store of value due to its volatility, but as a competitor for gold, not the dollar. The report also warns that not every successful investment should be part of a portfolio.
Crypto enthusiasts are optimistic about a new era of looser regulation, as Trump’s presidency has attributed bitcoin’s surge to him. SEC Chairman Gary Gensler, appointed by Biden, has a hard-line approach to cryptocurrencies, contributing to cybercrimes and scams. Gensler’s leadership has attempted to block bitcoin ETFs and take major exchanges to court.
Bitcoin analyst Isaac Boltansky predicts a significant shift in the crypto industry following Gensler’s departure, with a shift in ideology at the commission and government. If confirmed by the Senate, Atkins is expected to adopt an aggressive stance, with sitting commissioners Hester Peirce and Mark Uyeda.
Despite changes in personnel, jurisdictional battles over crypto regulation persist, with the agency and Commodity Futures Trading Commission sometimes interfering. The classification of cryptocurrencies as securities is still being debated in courts, beyond federal regulators’ jurisdiction. The next Congress, likely Republican-led, is expected to provide more clarity on stablecoins, a type of cryptocurrency with value tied to another currency or commodity.
Kevin Mahoney, a certified financial planner and founder of Illumint, advises investors to consider crypto’s integration into their financial goals to avoid a less stable financial situation. He suggests clients focus on historical stock market data rather than predicting government actions, which is more empowering and likely to succeed in avoiding missed opportunities for long-term investments.
