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When President Donald Trump took office, it seemed as if cryptocurrencies – especially Bitcoin – could achieve increased legitimacy and market stability. The Genius Act was introduced with the goal of making the United States the “crypto capital of the world.” white House Fact Sheet.
But a year into the president’s second term, many experts recommend not investing in Bitcoin. The Trump family’s involvement in cryptocurrencies with an eye to personal gain, including through the World Liberty Financial venture, could worsen the situation.
“(D)igital assets are perhaps the most obvious place to look for conflicts of interest that could impact the larger economy,” according to an opinion article by Rana Forohar. financial Times.
Dean Lyulkin, Co-CEO cardiffAn alternative business lending company, agreed. “Family is now synonymous with cryptocurrency and some kind of brotherhood,” he said, citing the presidential pardon of Changpeng Zhao, who co-founded Binance, which was involved in deals with World Liberty Financial.
This is why Lyulkin suggests not buying Bitcoin while Trump is in office.
Crypto may be at risk of manipulation
Lyulkin also addressed other issues related to the Trump family and crypto investing. “Because of their interest in crypto and their trading transactions, it becomes a target of bad actors like China and Russia,” Lyulkin said. “They have the power to move these types of markets today because they’re still so small.”
Lyulkin recommended not holding more than 5% of your portfolio in crypto due to the risks.
Crypto lacks history and staying power
Jay Zygmont, Ph.D., Certified Financial Planner (CFP) and Founder Childfree TrustAgreed that investors should limit their exposure to crypto. “For our clients who definitely want crypto in their portfolio, we strongly encourage them to hold it as a small percentage of their assets,” he said. “If a client wants to take 10 percent or less and invest in a speculative stock or crypto, that’s fine as long as it doesn’t exceed that.”
As assets go, cryptocurrencies are a relatively new invention. “Crypto assets are largely unregulated and lack the strong history of stocks and bonds,” he said.
Gold outperformed Bitcoin
Some investors see Bitcoin as a hedge against inflation or even economic collapse, but Lyulkin does not accept the analogy of Bitcoin as liquid gold. “Bitcoin is not acting the way gold is a hedge. Bitcoin is essentially flat for the year and gold is up more than 60 percent,” he said. “Bitcoin clearly has not been able to attract the dollars that investors have poured into precious metals.”
“I agree with (Warren) Buffett that crypto, by itself, doesn’t create anything or have any inherent value,” Zygmont said.
Editor’s note on political coverage: GOBankingRates is non-partisan and strives to objectively cover all aspects of the economy and offer balanced reporting on politically focused finance stories. You can find more coverage on this topic here GOBankingRates.com.