So far, in November, Bitcoin has reached new heights, hitting an all-time high of NZ$128,110 (US$76,132) recently, and showing no signs of slowing down.  

As global interest in Bitcoin grows, New Zealand investors are watching closely. What's driving Bitcoin's meteoric rise, and what does it mean for KiwiSaver investors looking to diversify their retirement portfolios? 

Trump’s Pro-Crypto Stance and the 2024 Election 

The rising optimism about US President-elect Donald Trump’s stance on cryptocurrency is a major factor contributing to Bitcoin's surge. Throughout his 2024 re-election campaign, Trump branded himself as the "pro-crypto" candidate. Trump has repeatedly spoken about his desire to make the United States the "crypto capital" of the world, pushing for policies that would reduce the regulatory burden on the crypto industry.  

The policy most significant to Trump's pro-crypto stance is the Strategic National Crypto Stockpile. This would involve the US government purchasing and holding significant amounts of cryptocurrency, further legitimising digital assets and boosting investor confidence. 

The crypto markets surged on Tuesday night, with Bitcoin reaching a new all-time high above $75,000 (USD) following the NBC News Decision Desk’s projection of a series of wins for Trump. This political momentum has provided a major boost to Bitcoin, with investors expecting that a Trump presidency could lead to fewer regulatory hurdles and more institutional support for cryptocurrencies. However, despite this optimism, Bitcoin’s volatility remains a constant factor in the market. While its price has soared, the cryptocurrency is still prone to sharp fluctuations, and its value can be influenced by a range of unpredictable factors, including market sentiment and global events. This volatility could continue to challenge both investors and the wider adoption of Bitcoin in the long term and should be considered within one’s overall investment strategy and risk appetite. 

The Growing Influence of Bitcoin ETFs and Institutional Support 

In addition to Trump’s promises, another major factor fueling Bitcoin’s rise is the growing adoption of exchange-traded funds (ETFs) focused on cryptocurrency. Bitcoin ETFs allow institutional investors and everyday people to gain exposure to the digital currency without directly purchasing or holding it themselves.  

Many large investment houses have embraced Bitcoin ETFs, which has opened up crypto markets to a broader range of institutional and retail investors.  Large institutions can now invest in Bitcoin without needing to set up wallets or build out the infrastructure to invest in crypto, they can use their existing trading and custody relationships. 

James Quinn-Kumar, Director of Community Engagement at Binance New Zealand, highlighted ETFs' significant role in Bitcoin’s recent rise. "Bitcoin has grown by 70% since the start of the year, and spot Bitcoin ETFs now collectively hold about 5.2% of Bitcoin’s total supply. This influx of institutional interest has also helped bolster Bitcoin’s price," he said. A recent Bloomberg article finds 29% more hedge funds are now exploring Crypto.  

As more traditional financial products linked to cryptocurrency emerge, the legitimacy of Bitcoin is growing, helping to solidify its place in diversified investment portfolios. 

Bitcoin as "Digital Gold": A Hedge Against Inflation 

Bitcoin’s recent price rise also reinforces its growing reputation as a store of value—what many are now calling "digital gold." In a world where inflation concerns are rising, and central banks continue printing money, Bitcoin is being viewed as an asset that can’t be devalued by governments. 

The Impact of Crypto on KiwiSaver and New Zealand Investors 

For New Zealanders, Bitcoin’s rise offers both opportunities and challenges. With more KiwiSaver providers offering crypto-focused funds, New Zealand investors now have access to a growing range of options to include digital assets like Bitcoin in their retirement savings strategies. But with the potential for high returns comes high volatility—Bitcoin’s price can swing dramatically over short periods, which can be a concern for long-term investors. 

While Bitcoin’s recent rally might be tempting, it’s important to assess whether cryptocurrency fits within your overall investment strategy. It is risky, unproven and there is still a relatively high chance it may fall to zero given the lack of obvious use cases. 

Final Thoughts: Should You Invest in Bitcoin? 

With Trump’s pro-crypto policies, the rise of Bitcoin ETFs, and Bitcoin's increasing reputation as "digital gold," the future of cryptocurrency looks bright. However, the volatile nature of these assets means they should be approached with caution. Diversification and long-term thinking are key to ensuring that your investment strategy can weather the ups and downs of the crypto market. 

As Bitcoin continues to break records and attract institutional interest, one thing is clear; the crypto revolution is just starting. For KiwiSaver investors, staying informed and planning carefully will be crucial in navigating this exciting new frontier in global finance. 

*Cryptocurrencies are highly volatile assets and not suitable for everyone. Before investing part of your KiwiSaver balance in cryptocurrency, it is crucial that you have a clear understanding of all the associated risks: https://shorturl.at/U6Mkp

*Kōura Wealth is the issuer of the Kōura KiwiSaver Scheme. View our PDS at kourawealth.co.nz