Bitcoin may have just marked its ascension into the mainstream investment world by passing the $100,000 valuation mark late Wednesday, continuing a post-election growth wave for a cryptocurrency market driven by investor enthusiasm for President-elect Donald Trump’s promises to institute a more crypto-friendly regulatory environment in his second term.
While Trump is a past critic of cryptocurrencies and at one point warned that investments in the digital tokens were a “scam,” he has since pivoted to the role of crypto proponent and made repeated pledges during his campaign to create a friendly space for the sector. Among his pro-crypto comments was a promise made during a July keynote speech at a cryptocurrency conference in Nashville that under his administration, “the rules will be written by people who love your industry, not hate your industry.”
On Wednesday, Trump made good on that pledge, selecting Paul Atkins to head up the U.S. Securities and Exchange Commission. Atkins, who served as an SEC commissioner from 2002 to 2008, is widely known as a strong supporter of the cryptocurrency market.
Trump highlighted Atkins’ stance on digital currencies in a Wednesday announcement of the selection, posted on Truth Social.
“Paul is a proven leader for common sense regulations,” Trump wrote. “He believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors, & that provide capital to make our Economy the best in the World. He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”
Current SEC Chairman Gary Ginsler previously announced he would step down on Jan. 20, the day of Trump’s inauguration. Ginsler oversaw numerous enforcement actions focused on the crypto industry during his tenure.
The cryptocurrency market has exploded since Bitcoin made its public debut in 2009 and the current portfolio of digital tokens numbers in the tens of thousands. Market volatility has been a benchmark of those virtual currencies as regulators in the U.S. and around the world have struggled to assemble a framework that suits the decentralized currencies.
Bitcoin broke the $100,000 line late Wednesday and was trading at around $101,400 at midday Thursday but had dropped back to just under $99,000 per token on Thursday afternoon, according to tracking by CoinGecko. At that time, the global cryptocurrency market capitalization came in just shy of $3.8 trillion.
Financial experts warn that even as bitcoin and other digital currencies appear to be on an upward swing, similar value jumps in the past have also been followed by downswings.
A Thursday report from The Wall Street Journal notes crypto’s “striking reversal from its early years as a cypherpunk rebellion against the establishment” as it becomes more widely accepted by the same system it was designed to thwart.
“I find it very ironic,” Tim Swanson, head of market intelligence at Clearmatics, a London-based blockchain company, told The Wall Street Journal. “The whole purpose of bitcoin was to create an alternative payment infrastructure outside of traditional finance and government surveillance. Now some bitcoiners are looking to embrace governments, or even get subsidies.”
Crypto investment for beginners
For those interested in taking a first step into crypto investment, there are numerous how-to’s out there, including a primer from Investopedia that offers some basic guidelines, though it’s guidance rife with reminders that cryptocurrency markets are highly volatile and lack many of the regulatory protections of the legacy brokerage realm.
The investment guidance website notes buying Bitcoin and other digital currencies can seem complicated if you haven’t done it, but it’s relatively simple. It just requires an account at a service or an exchange and a way to store your purchases safely.
To dive into the world of crypto investment you must select an appropriate service or venue, connect with a payment method, place an order and ensure stable storage for purchased cryptocurrency. Each of those steps requires research and a careful assessment of the pros and cons of the relevant service. Bitcoin is available at bitcoin ATMs or from payment services like PayPal and mainstream brokerage firms like Robinhood or Coinbase.
What if you want to sell your crypto?
You can sell your crypto tokens through the same exchange that mediates your purchases though the transactions are also subject to fees.
Investopedia strongly advises those interested in becoming cryptocurrency investors to thoroughly research crypto exchanges and their services before making an investment. The site also includes this warning about a major difference in investments made through legacy brokerage firms versus crypto exchanges:
“Bitcoin and other cryptocurrency investments are not protected by insurance from the Securities Investor Protection Corp. (SIPC). At regular brokerages, the agency protects against the loss of securities and cash in brokerage accounts containing up to $500,000, with a $250,000 cash limit. Cryptocurrency exchanges such as Coinbase have crime insurance to protect their infrastructure against hacks. But that insurance doesn’t protect individual customers from password theft.”