Bitcoin’s value has reached new heights as President-elect Donald Trump expresses support for cryptocurrencies and plans to boost them. Financial experts caution investors to approach the market carefully, advising them to understand the basics of bitcoin as a decentralized digital currency. The price of bitcoin has seen significant fluctuations, with the token trading at around $100,000 last week, up from around $43,000 in January.
While some investors are eager to capitalize on the cryptocurrency surge following Trump’s election, experts urge caution and recommend allocating no more than 2% of a portfolio to bitcoin. Exchange-traded funds can help mitigate risk, with popular options available such as the Grayscale Bitcoin Trust. However, Federal Reserve Chairman Jerome Powell remains skeptical of bitcoin, calling it a speculative asset rather than a viable form of payment or store of value.
Despite the recent excitement in the crypto market, not all investments that perform well need to be included in a portfolio. The departure of SEC Chairman Gary Gensler is seen as a positive development for the crypto industry, with hopes for looser regulation under Trump’s administration. However, there are still jurisdictional battles and questions surrounding the classification of cryptocurrencies as securities.
Prospective investors are advised to carefully consider their financial goals and avoid overcommitting to cryptocurrencies. While uncertainty remains regarding future regulations, focusing on established financial strategies and historical data may be a more reliable approach to investment success.
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