How to think about Bitcoins booms and busts in the Trump era

Bitcoin has been on a roller coaster since the November election.Should you be strapping yourself in, or should you unbuckle and climb out of the car?The post-election boom pierced $100,000, leading bulls to speculate that seven digits were next as “pro-crypto” President Donald Trump prepared to take office.

Then, a day after the inauguration, a slide of more than 20% began. Bulls say “buy the dip and watch it rip.” But before diving in, ask yourself this: Why should you own crypto? Let’s tally up the cases for and against.Many claim the post-vote gains are justified – just the start.Crypto firms were big Trump donors.

They expect lighter US regulation and pro-crypto legislation.Trump touts plans for a US federal crypto stockpile! Will any of this happen? Unclear.

Contrarywise, is increased government involvement in a supposedly decentralized currency actually bullish? Your call.It’s not just the US where investors are pinning hopes on cryptocurrencies and related innovation.New York, Amsterdam, Hong Kong, London, Tokyo – virtually every financial hub vies to be crypto’s capital.But what is the case for you to own it? Many see crypto as a diversifier, guarding against currency risks.

And new ETFs make it easier to buy.Others envision an inflation hedge.

Since Bitcoin supply is capped at a now-approaching 21 million, it can’t be endlessly devalued like dollars.Plus, many Bitcoins are lost, likely forever, shrinking supply.Many downright drool over astronomical gains.

Since 2010, Bitcoin soared 160% annualized through 2024’s close.It rose 121.6% in 2024 and 52.8% from Trump’s win through Jan.

21’s high.Explosive.But while Bitcoin booms, it also bombs.

In rolling 12-month spans this decade, Bitcoin returns ranged between 1,402% and negative 74%.Bitcoin first hit $100 on April 1, 2013.It peaked at $230 eight days later.

By July it fell 71% to $66.Later in 2013, it topped $1,000.

After that, a nearly two-year, 84% drop ensued....