Crypto is booming. Washington is driving the rally

For cryptocurrency, this summer will go down in history.

Shares of companies involved in the cryptocurrency space are skyrocketing, Bitcoin is surpassing all previous records, and Wall Street is reconsidering its position on the sector.

After initially existing on the outside of the financial industry, Bitcoin is now being adopted by an increasing number of eager investors, mostly due to the backing of the White House. More than ever, it is integrating with traditional finance, supported by broad legislative changes in Washington.

Previously relegated to the financial periphery, Bitcoin is now being adopted by an increasing number of eager investors, mostly due to the backing of the White House. As a result of extensive legislative changes in Washington, it is integrating with traditional finance more than ever.

This year, shares of the cryptocurrency trading platform Robinhood (HOOD) have increased by 200%. The cryptocurrency exchange Coinbase (COIN) has increased by 28%.

Bitcoin buyer Strategy (MSTR) has increased by 26% so far this year. Additionally, bitcoin mining company BitMine Immersion Technologies (BMNR) has increased by 625%.

By contrast, the benchmark S&P 500 has experienced a 10% increase this year. An index that tracks the top 100 tech companies in the US, the Nasdaq 100, is up 13%.

Crypto is reaching previously unheard-of heights. The business is being boosted by Google’s multibillion-dollar partnership with TeraWulf, a bitcoin mining startup.

According to Brian Dobson, head of disruptive technology stock research at trading firm Clear Street, “institutional adoption and strategic infrastructure deals have propelled crypto markets well beyond summer expectations.” “We believe that this is just the beginning of a larger cycle.”

A tenacious rally

According to Steve Sosnick, chief strategist at trading platform Interactive Brokers, the present crypto frenzy has the ingredients for a traditional speculative rally, bolstered by strong bullishness on tech, AI, and cryptocurrency.

According to Sosnick, “the (Trump) administration declared that it would be crypto-friendly.” “Speculation of any kind has been welcomed by the markets.”

Since its June 5 launch on the New York Stock Exchange, Circle (CRCL), a stablecoin issuer (a kind of cryptocurrency), has increased by 80%. Bullish (BLSH) is the most recent cryptocurrency-related company to list on the New York Stock Exchange.

Large purchasers have been retail investors. Nonetheless, according to a Bank of America poll conducted in August, 9% of international fund managers were exposed to cryptocurrencies.

According to Michael Green, chief strategist at Simplify Asset Management, “one factor is just pure excitement around the potential diversification of 401(k)s into alternative assets.” “Flows into bitcoin in particular this year have been greatly boosted by the increasing acceptance and awareness of crypto in that space.”

Bitcoin’s rise has also been aided by BlackRock. Following the Securities and Exchange Commission’s approval of bitcoin-focused exchange-traded funds (ETFs), the asset management company introduced its own bitcoin ETF in January 2024.

According to Green, the ETF has increased 137% since its inception and is now the main way for investors to gain exposure to bitcoin without actually buying the cryptocurrency. In contrast, the S&P 500 has increased by 37% during same time frame.

Wall Street is paying attention.

Trump’s signing of the GENIUS Act into law on July 18, which established rules for stablecoins, was another victory for the cryptocurrency space.

One kind of cryptocurrency that is tied to another asset, such as the US dollar, to maintain its value is called a stablecoin. It may find application in digital payments due to its “stable” value.

During the July earnings call, Jamie Dimon, the CEO of JPMorgan Chase, stated that the bank would be involved in stablecoins in order to “understand it” and “be good at it.”

“Being involved is the way to be cognizant,” Dimon stated. “We will participate and gain a lot of knowledge.”

On July 30, JPMorgan also revealed a collaboration with Coinbase “to make buying crypto easier than ever.” Beginning this fall, Chase customers will be able to fund their Coinbase accounts to purchase crypto with their Chase credit cards.

Benefits and hazards

With all the crypto changes this year, it’s important for investors to “seek as much education as possible” on new technologies and assets like bitcoin to better grasp “all of the opportunities and risks involved,” said Chris Kuiper, vice president of research at Fidelity Digital Assets.

The Trumps have been involved in the cryptocurrency business. A business connected to the Trump family, World Liberty Financial, has released its own stablecoin.

In a social media post on Thursday, Treasury Secretary Scott Bessent stated that the government wants “to carry out the President’s pledge to establish the United States as the ‘Bitcoin superpower of the world.'”

Markets applaud advancements in the field, but others are pointing out the shortcomings of cryptocurrencies and voicing worries about possible financial hazards. For instance, supporters of the cryptocurrency sector have hailed the GENIUS Act. Yet some policy advocacy groups are drawing attention to what they call the lack of consumer protections.

“The GENIUS Act does not really offer much in the way of consumer or investor or financial stability protections beyond what already exists,” said Amanda Fischer, policy director at Better Markets, a nonprofit advocacy group.

“I do not think that this bill should be viewed as regulating stablecoins, so much as it is the government endorsing stablecoins and importing crypto risks into the regular financial system,” Fischer said.