The crypto market came alive on Friday, the last trading day for Wall Street markets before the Trump presidency begins on Monday. Of course, crypto is traded 24/7, but volume and liquidity often drop over the weekend, so traders build their final positions before the new administration takes over.
Bitcoin (BTC 4.05%) led the way, up 5.6% over the past 24 hours as of 12:30 p.m. ET and nearly surpassing $105,000 per token. Ethereum (ETH 4.84%) is up a more modest 2.6% over this period, and Dogecoin (DOGE 7.97%) is up 7.3%.
Will the crypto floodgates open on day one?
Reports are circulating in the media that President-elect Trump will sign an executive order making crypto a national priority on his first day in office. It’s unclear exactly what this means beyond replacing the current chairman of the Securities and Exchange Commission with a more crypto-friendly regulator.
Traders buy tokens We might be surprised how slowly politics will change in Washington, DC, and where those changes will come from. Congress will likely need to act to make the industry’s rules clearer, but that doesn’t mean meme coins and blockchain tokens will necessarily gain value. Instead, it means assets such as stocks and bonds could be traded on the blockchain and more innovation, such as business formation, could take place on the blockchain rather than through costly legal channels .
I think the policy changes will largely benefit crypto, but the winners may not be the obvious tokens emerging today.
When the rubber hits the road
During this period between the election and the inauguration, the market speculated on everything from regulation to the crypto reserve in the United States. Investors believed the rumors. Now is the time to pay attention to the news.
It will be much more difficult to gain momentum if the news does not meet high expectations. The Federal Reserve cannot do Bitcoin or any other cryptocurrency, a reserve currency without an act of Congress, and this is unlikely, given the slim majority that holds the bodies together today.
Most exchange-traded fund inflows hitting the market have also been priced in since they occurred in early 2024.
The most likely outcome for crypto is some disappointment as the market begins to realize that the next catalyst is not near. But for long-term investors, I think the growth of stablecoins for everything from currency exchanges to online payments is something to watch. This is the real use of blockchain is designed for; it simply won’t increase the value of most tokens.
Momentum and memes drove the day
Today’s move is driven by more speculation that President Trump will benefit the crypto market. But this kind of speculation has already led investors astray. In 2021, it was thought that inflation and high budget deficits would lead to significant gains for Bitcoin and other cryptocurrencies, but the opposite happened. The market crashed in 2022 and has only recently recovered.
I think the blockchain has a bright futurebut I’m not buying tokens on speculation at this peak. I think there will be better opportunities to buy the dip in the future.
Travis Hoium has positions in Ethereum. The Motley Fool posts and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.