During President Donald Trump's first term in office, it was not uncommon to hear him speak about the stock market during press interviews. In a way, this isn't entirely surprising given his history as a real estate developer. Since he was sworn in again last week, Trump has frequently spoken about other market-related items such as interest rates and tariffs.
However, the president appears to have formed an interest in another area of the market outside of its traditional dynamics: cryptocurrency.
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Below, I examine two popular cryptocurrencies and make the case for which one I see as the better buy during Trump's next four years in the Oval Office.
XRP (Ripple): Good opportunity for $3?
Ripple is a payments network that serves as an alternative to legacy solutions such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT) protocol. The main benefits of using Ripple's infrastructure are faster payment settlement times and lower fees compared to mainstream providers. XRP (CRYPTO: XRP) is a cryptocurrency that trades on the Ripple network, offering banks and corporations a creative way to send funds back and forth while circumventing hefty foreign exchange fees.
As of this writing (Jan. 27), XRP's price is about $3. Cheap, right? Well, as I've written before, a lower dollar amount does not always equate to a reasonably priced asset.
In the chart above, you can see that XRP was trading below $1 for most of last year. But then in November, the cryptocurrency skyrocketed and it now boasts a market capitalization of $171 billion.
The primary catalyst that fueled XRP's surge was Trump's reelection. During his time on the campaign trail, Trump frequently touted pro-crypto rhetoric -- especially from a regulatory standpoint.
Moreover, Trump's nomination of Paul Atkins to lead the Securities and Exchange Commission (SEC) is also viewed as a major positive for XRP. The reason is that Ripple has spent the last several years in a legal whirlwind with the SEC, which alleges the company is selling XRP as an unregistered security. Given Atkins' support of the crypto landscape, some speculate that his leadership at the SEC (should he be confirmed) could put an end to Ripple's lawsuit and pave the way for a brighter future for XRP.
Image source: Getty Images.
Bitcoin: Is President Trump paving the way for Bitcoin's future?
Shortly after his inauguration, Trump stepped into the Oval Office to sign piles of executive orders. Among them was an order to "promote United States leadership in digital assets and financial technology."
While this statement is rather broad, I see this order as particularly positive for Bitcoin (CRYPTO: BTC). My reasoning revolves around the president and some in his inner circle consistently floating the idea of a strategic Bitcoin reserve.
Bitcoin is a more established cryptocurrency than XRP and the president's specific support of it gives me some degree of confidence. To be clear, though, just because the president signed an executive order delegating his advisors to work on more crypto-friendly frameworks and the potential adoption of Bitcoin to the U.S. balance sheet does not necessarily mean any of these things will happen.
The verdict
While I see that Atkins being confirmed to lead the SEC could be a net positive for Ripple, I also think if the SEC drops its lawsuit against the company, then any upward swings in XRP could be fleeting. In other words, Ripple winning its case against the SEC would not necessarily be a success story for XRP specifically. The reason is that banks and corporations could still work with Ripple's payments network without adopting XRP in any way.
Furthermore, I'd caution against following any momentum-driven volatility that XRP could experience should Ripple come out unscathed from its legal turbulence. To me, XRP remains a speculative opportunity in the crypto realm and I'd hesitate to invest in it right now.
However, I am optimistic that better days are ahead for Bitcoin over the next four years. I think the regulatory environment surrounding crypto will change dramatically under Trump, and in such a way that positively influences the price of Bitcoin further.
While Bitcoin still carries some degree of speculation, I am more bullish on its price appreciation in the long run when compared to other cryptocurrencies such as XRP.
Should you invest $1,000 in XRP right now?
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Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
