With Donald Trump’s second inauguration as the USA’s 47th President yesterday and the launch of the $Trump and $Melania coins over the weekend, Kenneth Lamont, Principle at Morningstar, has provided the following insight on the new US President’s potential impact on the cryptocurrency market saying:
“If Donald Trump delivers on his election promises, we could see cryptocurrency markets continue to surge. However, investors would do well to resist the siren call of fear of missing out, and sit on their hands. The official Trump coin $Trump was announced on Friday and by mid-day Sunday the newly minted meme coin had a market cap just short of $14bn before tumbling just a day later following the news of $Melania coin.
Fear of missing out is not an investment strategy. For many investors, the lure of easy wealth is strong. Unfortunately, at Morningstar our research has shown repeatedly that investors (particularly retail investors) tend to be poor at market timing, buying and selling at the worst moments. These poor decisions are exaggerated when investing in highly volatile investment, often leaving investors out of pocket. Even the less flashy cryptocurrencies have been highly volatile. Since September 2015, Bitcoin has been nearly 5 times as volatile as US stocks, and Ether has been nearly 10 times as volatile.
When you start to step away from the more recognised coins, things get even more complicated. The ever expanding digital graveyard of crypto-currencies should also serve as a reminder that the chances of picking a winner are also stacked against you. Ignoring the stories of the overnight millionaires can be hard, but the chances are your wallet will thank you.”
