Bitcoin has soared to unprecedented levels, crossing the $124,000 CAD mark for the first time, buoyed by speculation that Donald Trump’s return to the White House could usher in a more crypto-friendly era. After reaching a peak of just over $124,000, the cryptocurrency slipped slightly but remains over triple its value from a year ago, when it traded around $37,000 CAD.
What’s going on???
This meteoric rise has reignited conversations about the potential of cryptocurrencies. For Canadians, it’s a compelling moment to assess the role of Bitcoin and other digital assets in their portfolios. While the allure of crypto gains is strong, it’s crucial to approach this space with caution and strategy. The Money Couch philosophy? Crypto can be part of a well-rounded investment portfolio, but only as a “fun money” allocation. Stick to keeping speculative assets like crypto and high-risk stocks within 5-10% of your total investments—enough to enjoy the ride without jeopardizing your long-term goals.
Trump’s Crypto Effect: Why Bitcoin Is Surging
Part of Bitcoin’s latest boom can be traced to political developments south of the border. During his campaign, Donald Trump shifted from his earlier stance, calling Bitcoin a “scam,” to actively courting the crypto community. This pivot included attending blockchain events and endorsing crypto ventures like World Liberty Financial, run by his family. Many investors believe a Trump-led White House could bring deregulation to the sector, making it easier for retail investors to jump in.
The excitement has spilled over into other cryptocurrencies this last week like Ethereum (+35%), Shiba Inu (+70%) and Dogecoin (+115%), as well as shares of crypto-related companies. Coinbase, the popular crypto exchange, has seen its stock skyrocket 60% since the U.S. election results were confirmed. Meanwhile, Tesla’s stock climbed nearly 9% amid speculation that the administration could fast-track autonomous driving technologies and AI development.
A Balanced Approach to Crypto Investing
For Canadians looking at these headlines, it’s tempting to dive in headfirst. But as your Money Couch, I recommend keeping your approach grounded. Crypto can absolutely be part of your portfolio—just don’t bank your future on it. Instead, treat it as an exciting opportunity to learn and participate in something new, but with strict limits.
Allocate no more than 5-10% of your portfolio to speculative or “fun” investments. This category can include cryptocurrencies, stocks from companies you’re personally passionate about, or even meme-inspired picks like Dogecoin. The idea is to have some skin in the game without taking on undue risk.
The bulk of your portfolio should remain in stable, diversified assets like ETFs, index funds, or blue-chip stocks. These investments provide the foundation for long-term growth and financial security. While crypto can add an element of excitement to your portfolio, its true value lies in its ability to facilitate trade—whether it’s buying products from companies like Apple, investing in energy solutions, or even purchasing vehicles. However, another issue is that as fast as crypto can rise, it can fall just as quickly. That kind of volatility is far from the grounding you’d expect from a stable investment or currency. But let’s face it—it sure can be fun!
The Bottom Line
Yes, Bitcoin’s surge is exhilarating. The idea of crypto gaining mainstream acceptance, bolstered by political shifts, might make it feel like the future is here. But remember, Bitcoin and other cryptocurrencies remain volatile, speculative assets. The same forces driving prices up can reverse just as quickly.
So go ahead, add a little Bitcoin or Ethereum to your portfolio if you’re curious. Just ensure it’s money you can afford to lose. Because as exciting as it is to ride the highs, the lows are much easier to handle when they don’t compromise your financial stability.
As we discussed in the post, The Guaranteed Jackpot – How Saving $5 a Day Can Secure Your Retirement, it doesn’t take a ton of money to make your own winning lottery. There’s no need to recklessly invest in speculative crypto funds.
Invest with care, keep your balance, and always make your money work for you—not the other way around.
