Bitcoin (BTC -3.24%)) was on an incredible race in the last six months, increasing by 50% in value and crossing a massive step along the way, because it exceeded $ 100,000 for the first time. Cryptographic investors have been optimistic about recent election results, hoping that President Donald Trump will help digital currency reach even higher levels in the years to come.
There is a lot of excitement around the cryptocurrency, and the Trump administration has already made a significant announcement which could prove to be a catalyst to generate the price of Bitcoin even higher. Could this recent development feed the digital part with a value of $ 200,000 or more this year?
New working group to develop cryptographic regulations
Earlier this month, the chairman of the acting securities commission and the exchange (sec), Mark Uyeda, announced plans for a working group that will help create and describe a complete regulatory framework and clear for cryptographic active ingredients “. This is an important development for crypto as a whole because it could help add credibility and legitimacy to digital parts. The implementation of a process to record new parts could help reduce part of the risks associated with investment in crypto.
This could also be based on the question of whether cryptocurrencies should be recorded as titles with the dry, and what regulations the transmitters of cryptographic assets must follow.
Could this trigger a bull on Bitcoin?
The price of Bitcoin jumped more than 4% of the publication of the day of the work force. Although development cannot necessarily directly Impact Bitcoin, any positive news relating to the world of cryptography is generally positive for Bitcoin also. The addition of legitimacy to cryptocurrencies could influence the investors who are on the closure of investing in the crypto, and with bitcoin being the largest digital part, it can be the default option for investors who want a Exhibition at digital currencies.
If the working group ends up finding friendly crypto rules – as many investors expect this to be the case given Trump’s favorable comments concerning the crypto on the campaign track and its close relationship with Tesla CEO Elon Musk (which has long been optimistic about crypto) – this could indeed be an important catalyst that pushes the value of Bitcoin above this year.
Investors should however be cautious because investing in Bitcoin remains risky. Many factors, including interest rates, inflation, economic conditions and regulatory problems, can all potentially weigh where digital currency happens in the future. With as many variables to consider, it is by no means a slam dunk that Bitcoin will come in value this year.
Is that a good time to invest in Bitcoin?
Unless you are ready to take a high risk degree, you might be better to avoid bitcoin at the moment. The massive gains of cryptocurrency in the past few months suggest that expectations are already high that there will be an important reform to come for the crypto. And this can already be evaluated in the high price of Bitcoin, which is why I would not expect this news to send the value of the much higher cryptocurrency this year. Although a modest gain is possible, I would not expect it to reach $ 200,000 anytime soon.
In addition, there is a danger that if the Trump administration ends up disappointing cryptographic investors with cryptographic policies less than optimal or by not favoring reform, this could cause bitcoin delivery some of the impressive gains that it has generated in recent months.
In the end, this remains an asset and a very speculative investment to hold in your wallet. But if you want an exposure to Bitcoin and you agree with the risk, I suggest allocating only a small part of your wallet (that is to say less than 10%) in digital asset.
David Jagielski has no position in the actions mentioned. The Motley Fool has positions and recommends Bitcoin and Tesla. The Motley Fool has a policy of disclosure.
