Bitcoin’s value has been on the rise following President-elect Donald Trump’s supportive comments towards cryptocurrencies. Despite the optimism, financial advisers still urge caution and recommend investors to dip their toes into the market rather than diving headfirst due to the volatile nature of bitcoin.
While Trump’s administration is currently seen as pro-crypto, experts caution that political attitudes can change quickly. Advisors recommend understanding the basics of bitcoin and its volatility before investing, with some suggesting allocating no more than 2% of a portfolio to bitcoin or other cryptocurrencies.
Investors are advised to start with bitcoin-based exchange-traded funds to limit direct risk. While some believe in the potential of bitcoin, Federal Reserve Chairman Jerome Powell remains skeptical, stating that it is still primarily treated as a speculative asset rather than a form of payment or store of value.
The impending departure of SEC Chairman Gary Gensler has led to anticipation for a more lenient regulatory environment for cryptocurrencies under Trump’s administration. However, there are still challenges ahead, including jurisdictional battles between the SEC and CFTC over crypto regulation.
Financial planners recommend considering how crypto investments fit into overall financial goals and warn against putting too much money into volatile assets. Despite the potential benefits, they urge clients to focus on historically proven investment strategies rather than speculative trends.
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