U.S. politics certainly have a major impact on the crypto world. So then how will the election of former Vice President Joe Biden impact things?
Well, before he comes into power on Jan. 20, there may already be a variety of factors that will drive the crypto markets. President Donald Trump has refused to allow for the transition and has been aggressive with firing national security figures. Then there was the Washington Post story, in which he was reported to have asked about potentially taking military action against Iran.
But after Trump departs, Biden will have his own approach that will likely change the crypto market. Note that he has named Gary Gensler as the chief of the transition team for financial policy. Gensler is the former chairman of the Commodity Futures Trading Commission (CFTC) under the administration of former President Barack Obama. He also is known to be favorable to cryptocurrencies, as seen with some recent congressional hearings.
Note that Vice President-elect Kamala Harris may be a supporter as well. She “will tap into the Jack Dorsey and Mark Zuckerberg types,” said Collin Plume, who is the CEO of Noble Gold Investments. “She is the California senator and having a more hands-on role, leaning on her relationships with tech leaders from Silicon Valley would benefit the U.S. national interests.”
Then given all this, what might be some interesting cryptocurrency investments? Of course, there are many coin names available. But let’s take a look at three:
- Bitcoin (CCC:BTC)
- Ethereum (CCC:ETH)
- XRP (CCC:XRP)
Crypto Play: Bitcoin (BTC)
Bitcoin is the pioneer and dominant cryptocurrency. It has actually become the top-of-mind word for the category.
As with any cryptocurrency, bitcoin is quite volatile. From July 2019 to March 2020, the value plunged from $11,000 to $5,100. But then bitcoin would go on a major bull run. The value is now above $18,000, which is a level that was last reached in late 2017. Importantly, the all-time high is $19,783.
Some of the big drivers have included the massive amounts of monetary and fiscal stimulus to manage the Covid-19 pandemic. Keep in mind that these actions have raised fears of inflation and financial instability. The result is that investors have been looking to alternatives to traditional currencies.
Another factor is that some of the world’s top investors have been buying up bitcoin, such as Paul Tudor Jones and Stephen Druckenmiller. What’s more, financial operators like Square (NYSE:SQ) and PayPal (NASDAQ:PYPL) have been building applications for cryptocurrency.
Ethereum (ETH)
Among the coin names in the crypto world, Ethereum has the second largest market position in terms of market capitalization. The underlying blockchain technology is based on an open-source model, which has helped accelerate distribution and innovation. Because of this, Ethereum is used for applications beyond financial transactions.
“Ethereum provides a rather critical service as we transition to a new ‘business operations normal,’” said Plume. “Ethereum’s smart contracts eliminates the need for physical contracts with less risks and vulnerabilities. As businesses restart with caution, Ethereum will provide one of the most critical services.”
Another bull is Ken Bodnar, who is a principal consultant with Blockchain Associates. According to Bodnar: “The volatility is lower than Bitcoin, it is more affordable, and it is useful for me as a blockchain creator to use as gas for writing Smart Contracts and cross-border payments. It is more than a store of value or investment because of its utility in my work.”
Crypto Play: XRP (XRP)
XRP is the digital token for the Ripple blockchain. The origins of Ripple go back to Ryan Fugger, a computer programmer who wanted to completely transform the global financial system. By 2012, his operation would be merged into Opencoin, which was a venture-backed startup. The goal was to greatly improve the traditional settlement and remittance system by using crypto assets. By doing this, there would be much lower costs and faster transaction processing.
Keep in mind that the Ripple crypto asset is relatively cheap. In fact, it is often referred to as the “crypto silver” versus the bitcoin “gold.”
Moreover, the buzz is that the Ripple startup may go public next year. If so, this will certainly bring much more attention to this market.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.
