Bitcoin At $100,000 Lures Long-Time Crypto Holdouts To Finally Buy

(Bloomberg) -- For more than a decade, they balked at the idea of buying crypto.

Some didn’t know how to get started. Others saw FTX collapse two years ago and chalked it all up to a scam. But then Donald Trump won the presidency and his crypto-friendly campaign promises sent Bitcoin soaring north of $100,000 — a number impossible to ignore.

“I've been wary of crypto my whole life,” said Ian Johnson, a 28-year-old living in Sioux Falls, South Dakota, who recently bought Bitcoin for the first time. “I just want to see what it does. If Trump does a good job, I feel like it’s going to spike like crazy.”

Johnson is part of a wave of first-time crypto investors flooding the digital asset world. The market value of the largest cryptocurrency is now more than $2 trillion, making it a bigger than all but a few public companies. Other coins like Ethereum and Ripple are seeing similar spikes.

It’s just the latest foray for Bitcoin into the mainstream. Wild price swings during the Covid-19 pandemic led to a series of high-profile crypto scandals that eroded its reputation, but the asset mounted a comeback in recent years. Increased institutional acceptance — especially the launch of Bitcoin ETFs — provided kindling for a rally, and Trump’s election ignited a full-blown frenzy.

While the president-elect’s crypto policies aren’t set in stone, he has promised to create a a national Bitcoin stockpile and recently tapped crypto advocate Paul Atkins to lead the Securities and Exchange Commission, paving the way for the removal of a relative hawk in Gary Gensler. Trump’s close ties with Elon Musk, known for influencing the price of meme coins with his social media posts, are also boosting optimism.

For Johnson, the hype on election night drew him in. He was watching the results and texting with a friend who had been urging him to invest in Bitcoin since 2012. It would be stupid not to get in now, the friend told him. So after seeing Trump win Pennsylvania — and having a few drinks — Johnson made an account on Crypto.com and bought $1,000 of Bitcoin.

It’s up some 50% since then. Johnson plans to put a couple hundred dollars a month into his account if the price keep rising, he said.

Mikko Rintala, a 50-year-old software engineer who lives in Finland, also got in around the election. Rintala is no fan of Trump and views crypto as a hedge against the volatility the president-elect could cause. He has about a $1,000 in his Binance account spread across Bitcoin and Ripple.

“I thought, if Trump won, then nobody knows what will happen to the economy,” he said. “For me crypto is like buying lottery tickets.”

Others say crypto’s re-entrance into the mainstream made them give it a second look. Hank Martinez in California told his family for years that crypto was a scam. Then, the 43-year-old tech-industry worker kept hearing it mentioned in the run-up to the election.

“Trump started talking about a crypto czar, and I was like, ‘okay so this thing is going to be legit?’” he said.

Martinez now laughs about how Googling “can you buy just a piece of Bitcoin?” before opening a Crypto.com account. His family is confused by his attitude change, but it’s been fun to watch the coins gain in value, he said.

Crypto.com was also the venue of choice for Bob Candelaria, who saw UFC fighter Jon Jones wearing a shirt with the exchange’s logo and decided to check it out. The 44-year-old truck driver, based in Nashville, was blown away by the ease of creating an account and buying his first bit of crypto. He spent a couple hundred dollars total on Bitcoin, Ethereum and Dogecoin. He now spends the time between runs in his truck studying up.

“If you breathe oxygen, you can buy crypto,” he said. “I've been telling my friends, if your eyes blink you can do it.”

About 17% of Americans have invested in crypto, with men under 50 the leading demographic, according to the Pew Research Center. US-based crypto exchange-traded funds, commonly used by retail traders, took in $7.2 billion in November for an all-time record, data from Bloomberg Intelligence shows.

Despite the new crypto fervor, financial advisers caution against investing without a plan in place.

Noah Damsky, principal at Marina Wealth Advisors, suggested waiting for a pullback from these recent highs to buy for the first time in light of the asset’s “boom-and-bust history.” Those interested should then develop a plan for how much crypto they want to buy each month and stick to that limit regardless of price changes, he said.

Brittany Wolff, founder of Wolff Financial in South Carolina, said buyers should be cautious when selecting an exchange and warned against having too much of your portfolio in a single cryptocurrency.

“If someone is curious about investing in crypto for the first time, I'd encourage them to start small, say 1% of their savings, and understand that the price is volatile and so their investment can see large drops,” she said.