The cryptocurrency market saw a sharp rise on Saturday. Bitcoin BTC/USD, Ethereum ETH/USD And Dogecoin DOGE/USD all saw an increase in value as traders anticipated potential “Trump bump” with the second coming Donald Trump presidency.
What happened: The crypto market came alive on the last trading day before the Trump administration took over. Bitcoin spearheaded the rally, rising 2.81% and reaching almost $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 cryptocurrencies, with rumors of an executive order on his first day in office. This could include appointing a more crypto-friendly chairman of the Securities and Exchange Commission.
However, traders are advised to be wary of the speed of policy changes in Washington. While changes to industry rules may require Congressional action, this does not necessarily translate into a direct gain in value for meme coins and blockchain tokens.
Instead, it could lead to the trading of assets such as stocks and bonds on the blockchain and more business creation on the blockchain.
Despite the current speculative surge, the market could be disappointed if the news does not meet high expectations.
The Federal Reserve cannot make Bitcoin or any other cryptocurrency a reserve currency without action from Congress, which seems unlikely in the current political climate.
The current market movement is largely driven by speculation that Trump will be beneficial for the crypto market. However, similar speculation in 2021 led to a stock market crash in 2022, warning investors against purchasing tokens based on speculation alone.
Why it matters: The potential for a “Trump coup” in the cryptocurrency market is significant, given the president-elect’s rumored focus on the sector.
However, the history of surges and crashes due to speculation in the crypto market serves as a warning to investors. Potential policy changes under the new administration could have significant implications for the industry, but these changes are uncertain and may take time to implement.
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