Crypto is booming. Washington is driving the rally
Wall Street is rethinking its stance on the cryptocurrency industry.
By John Towfighi, CNN
(CNN) — It’s been a summer to remember for crypto.
Bitcoin is eclipsing record highs, shares in crypto-related companies are soaring and Wall Street is rethinking its stance on the industry.
Once on the fringes of finance, cryptocurrency is now being embraced by a growing base of enthusiastic investors — and that’s driven in large part by the White House’s support. It’s integrating with traditional finance more than ever before, bolstered by sweeping legislative changes in Washington.
For example, President Donald Trump recently issued an executive order that opened the door for digital assets like crypto to be included in 401(k)s. This boosted bitcoin — the world’s largest cryptocurrency by market value — to a record high of $124,000 last week.
Anything related to bitcoin has been on fire this year as investors continue to pour money into crypto-related companies. Meanwhile, skeptics who warn of crypto’s flaws are raising concerns about heightened risks for consumers.
Shares in Robinhood (HOOD), a trading platform that includes cryptocurrencies, have soared 200% this year. Coinbase (COIN), a crypto exchange, has gained 28%.
Strategy (MSTR), a company that purchases bitcoin, is up 26% this year. And BitMine Immersion Technologies (BMNR), a company that mines bitcoin, has surged 625%.
In comparison, the benchmark S&P 500 is up 10% this year. The Nasdaq 100, an index tracking the 100 largest tech companies in the United States, is up 13%.
Crypto is climbing into unprecedented territory. Google is part of a multibillion-dollar deal with a bitcoin mining company called TeraWulf, helping drive enthusiasm about the industry.
“Institutional adoption and strategic infrastructure deals have propelled crypto markets well beyond summer expectations,” said Brian Dobson, head of disruptive technology equity research at brokerage firm Clear Street. “We see this as the early stages of a broader cycle.”
A persistent rally
The current crypto mania has the makings of a classic speculative rally, supported by intense bullishness on tech, AI and crypto, according to Steve Sosnick, chief strategist at Interactive Brokers, a trading platform.
“The (Trump) administration proclaimed that it would be crypto-friendly,” Sosnick said. “Markets have been very much willing to embrace speculation of any kind.”
Circle (CRCL), a stablecoin issuer (a type of crypto coin), has surged 80% since it debuted on the New York Stock Exchange on June 5. The latest crypto-related company to debut on the New York Stock Exchange is called Bullish (BLSH).
Retail investors have been big buyers. However, 9% of global fund managers surveyed by Bank of America in August had exposure to cryptocurrency.
“One factor is just pure excitement around the potential diversification of 401(k)s into alternative assets,” said Michael Green, chief strategist at Simplify Asset Management. “The growing acceptance and awareness of crypto in that space has really powered flows into bitcoin in particular this year.”
BlackRock has also propelled bitcoin’s ascent. The asset management firm launched its own bitcoin exchange-traded fund in January 2024 after the Securities and Exchange Commission greenlit bitcoin-focused ETFs.
The ETF is up 137% since its launch, and it’s become the primary vehicle for investors to get exposure to bitcoin without purchasing the cryptocurrency, Green said. The S&P 500, in comparison, has gained 37% across the same period.
Wall Street is taking notice
Another crypto win came on July 18, when Trump signed the GENIUS Act into law, laying out regulations for stablecoins.
Stablecoins are a type of crypto pegged to another asset, like the US dollar, to keep its value steady. The “stable” value gives it potential use in digital payments.
JPMorgan Chase CEO Jamie Dimon on his company’s earnings call in July said the bank is going to be involved in stablecoins to “understand it” and “be good at it.”
“The way to be cognizant is to be involved,” Dimon said. “We’re going to be in it and learning a lot.”
JPMorgan on July 30 also announced a partnership 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.
Rewards and risks
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 Trump family has been active in the crypto industry. World Liberty Financial, a company tied to the Trump family, has issued its own stablecoin.
Treasury Secretary Scott Bessent on Thursday said in a social media post that the government aims “to execute on the President’s promise to make the United States the ‘Bitcoin superpower of the world.’”
While markets cheer developments in the space, others are warning of crypto’s flaws and raising concerns about potential financial risks. The GENIUS Act, for example, has been heralded by proponents of the crypto industry. 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.
The-CNN-Wire
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