Why Bitcoin and Related Stocks Soared on Friday

Many stocks and funds in the cryptocurrency sphere soared on Friday. The classic Bitcoin (CRYPTO: BTC) cryptocurrency gained as much as 5.3%, as measured from Thursday's market close, boosting a wide range of closely related investments in the process.

Here's a sample of the most interesting Bitcoin-based gains:

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Data source: Google Finance and Finviz on 1/17/2025.

Will a second Trump term boost Bitcoin?

The fervor started with political rumblings.

The incoming Trump administration included crypto-friendly themes in its election campaign, and is now following through on that messaging with helpful political appointments. From the Securities and Exchange Commission to the congressional Financial Services Committee, new appointees are bringing in a more open attitude to the crypto industry.

Moreover, President-elect Trump has promised to issue several executive orders about crypto regulations, perhaps on the first day of his second term. That would be on Monday.

It's unclear exactly what Trump might say in these orders, and lawmakers who don't agree with these terms can slow down or even block some of them. But cryptocurrency enthusiasts expect government-sponsored Bitcoin mining, the first steps toward a strategic Bitcoin reserve in federal coffers, and more.

So it's a somewhat speculative price surge, but it does include elements of official policymaking and the hope of a more robust regulatory framework around creating, owning, and trading cryptocurrencies in America. If Trump holds up his part of the deal on Monday, the price gains could continue next week.

That's all good news for Bitcoin itself, and for spot Bitcoin exchange-traded funds (ETFs) like the leading iShares option in my data table. Coinbase could benefit from rising interest in cryptocurrency trades. MARA is a leading Bitcoin miner; Canaan makes the specialized computer chips that power crypto-mining data centers. All of these bullish moves make perfect sense today.

Don't count your encrypted chickens before they hatch

At the same time, Trump's cryptocurrency orders may face congressional friction and courtroom challenges. Those are the checks and balances built into the American Constitution. And it's hard to say exactly how helpful the promised orders can be until the Office of the Federal Register accepts and publishes them.

In the meantime, it's probably best to expect no significant changes to the crypto industry next week. Instead, you can base your investment moves on knowable facts such as the four-year cycle of Bitcoin halvings, the investor-friendly introduction of spot Bitcoin ETFs a year ago, and the media attention Bitcoin and other cryptocurrencies are getting from Trump's statements and actions.

And don't forget that companies like Coinbase, MARA, and Canaan are operating normal businesses with strict financial reporting requirements. Their business fortunes depend very directly on Bitcoin's price chart, but check out their cash flows and balance sheets before starting a position.

As you can see in the table, Friday's quickest gainers are actually trailing behind Bitcoin (and its ETFs) from a 52-week perspective. This is a risky business. With great growth prospects come great risks, to misquote a phrase from Peter Parker's Uncle Ben.

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Anders Bylund has positions in Bitcoin and Coinbase Global and has the following options: long March 2025 $19 calls on Mara, long March 2025 $19 puts on Mara, and short March 2025 $19 puts on Mara. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.