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Once derided as a fringe movement, like Magic: The Gathering or pickleball, crypto is now fully mainstream.
Crypto has been gaining steam after several of its biggest opponents were replaced by the Trump administration, lawsuits against major players were dropped, and a series of ETF debuts gave it a foot in the door of the financial world.
That door was kicked wide open last week when President Trump signed an executive order instructing the Labor Department and SEC to review guidance for retirement account managers about allowing alternative investments like cryptocurrencies into 401(k)s.
All of this recent success has propelled the total crypto market cap above $4.1 trillion today, a new all-time high.
Bitcoin is up 3.36% in the last week, rose above $120,000 earlier this afternoon, and remains inches away from a new record. Altcoins are even hotter: Ethereum just popped above $4,000 for the first time in years, and has climbed 15.49% in the last five days. Meanwhile, crypto trading platform Coinbase gained 2.92% today.
Crypto has finally arrived. The only question now is, what comes next?
The spotlight is blinding investors to dangers
A few things are clear: Adoption isn’t slowing anytime soon, even as the classic crypto risks remain.
The ability for companies to reinvent themselves as crypto treasuries and rake in investor money means the trend is here to stay. Just the other day, Trump-backed World Liberty Financial announced it’s partnering with a small blockchain company called ALT5 Sigma Corporation to effectively establish a $1.5 billion crypto treasury.
That’s not the only recent crypto news. Big banks and retailers alike are exploring stablecoin adoption, searching for ways to capitalize on that form of crypto’s latest legal success. Lenders may soon consider crypto assets when they’re assessing a borrower’s loan application. And Robinhood and Coinbase are trying to tokenize stocks, bringing publicly traded companies onto the blockchain.
The hype is extraordinarily high, but not everyone is gung-ho about crypto. Some pros note that the guardrails protecting the financial system from crypto volatility are being dismantled too quickly, and that betting big on the nascent asset remains risky.
For example: ALT5, the company partnering with World Liberty Financial, soared over 42% when the news was announced last week. It plummeted 26.5% today.
But these days, it’s not just the twists and turns of an individual stock or crypto coin that investors need to prepare their portfolios for. The last crypto crash in 2022, spurred on by the collapse of FTX, was contained to the crypto ecosystem. With regulators, publicly traded companies, and soon retirement accounts all-in on crypto, that won’t be the case the next time bitcoin takes a nosedive.—MR