The cryptocurrency market saw a notable surge on Saturday. Bitcoin BTC/USD, Ethereum ETH/USD and Dogecoin DOGE/USD all experienced a rise in value, as traders anticipate a potential ‘Trump bump’ with the upcoming second Donald Trump presidency.
What Happened: The crypto market sprung to life on the final trading day before the Trump administration takes over. Bitcoin spearheaded the rally, surging 2.81% and almost touching $104,987 per token. Ethereum (ETH -0.22%) and Dogecoin (DOGE -0.16%) also saw gains.
There is widespread speculation that President-elect Trump will prioritize cryptocurrency, with rumors of an executive order on his first day in office. This might include the appointment of a more crypto-friendly chairman for the Securities and Exchange Commission.
However, traders are advised to be cautious of the speed of policy changes in Washington. While changes to the industry’s rules may require congressional action, this doesn’t necessarily translate to a direct value gain for meme coins and blockchain tokens.
Instead, it could lead to assets like stocks and bonds trading on the blockchain and more business formation taking place on the blockchain.
Despite the current speculation-driven surge, the market may face disappointment if the news doesn’t meet high expectations.
The Federal Reserve cannot make Bitcoin or any other cryptocurrency a reserve currency without Congressional action, which seems unlikely in the current political climate.
The market movement today is largely driven by speculation that Trump will be beneficial for the crypto market. However, similar speculation in 2021 led to a market crash in 2022, cautioning investors against buying tokens based solely on speculation.
Why It Matters: The potential for a ‘Trump bump’ in the cryptocurrency market is significant, given the President-elect’s rumored focus on this sector.
However, the history of speculation-driven surges and crashes in the crypto market serves as a warning to investors. The potential for policy changes under the new administration could have far-reaching implications for the industry, but these changes are uncertain and could take time to implement.
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