In this article, cryptocurrencies saw an increase on Tuesday as optimistic investor sentiment resurfaced on President Donald Trump’s first full day back in office. The price of bitcoin rose by over 2% to $106,201.70, as reported by Coin Metrics. The broader crypto market, indicated by the CoinDesk 20 index, also went up by 1.6%.
Simultaneously, “Official Trump,” a token introduced last week representing the new U.S. leader, reduced its loss to 2.5% in the past 24 hours after a previous drop of more than 20%, according to CoinGecko.
On Tuesday afternoon, the Securities and Exchange Commission announced that acting Chair Mark Uyeda had initiated a “crypto task” force aimed at establishing a comprehensive and transparent regulatory framework for crypto assets.
Crypto investors have welcomed Trump’s return to the White House as a favorable development for the industry. The president has pledged to implement cryptocurrency-friendly policies, including a supportive regulatory environment and a federal bitcoin reserve.
Despite Trump’s inauguration on Monday lacking specific policy declarations concerning the sector, it initially seemed to dampen the enthusiasm in the crypto market.
Kenneth Lamont, a principal at Morningstar, cautioned investors against engaging in crypto trading without a thorough understanding of the associated risks. In emailed comments on Tuesday, Lamont stated, “If Donald Trump fulfills his election commitments, we may witness further growth in cryptocurrency markets. However, investors should be cautious not to succumb to the fear of missing out and should exercise patience.”
Cryptocurrencies are recognized for their volatility, with bitcoin, the largest digital coin globally, having previously experienced significant fluctuations in value within a single day. Alternative coins such as ether and XRP have shown even greater susceptibility to price swings.
Lamont emphasized that “Fear of missing out is not an investment strategy,” noting that many investors are enticed by the prospect of quick wealth. He added that retail investors often struggle with market timing, making decisions to buy and sell at unfavorable moments.
Reporting by CNBC’s Jeff Cox was included in this article.
