Cryptos jump after Biden’s regulation order
Will investor relief be enough to drive Bitcoin above the US$45K resistance level for a possible uptrend?
Bitcoin (BTC) jumped back near US$42,000 Wednesday US time after President Joe Biden's executive order to examine digital assets, which the crypto industry viewed as a constructive move amid concerns over a potential regulatory crackdown.
Bitcoin rose nearly 10%, lifting with it the prices of several other crypto currencies.
Crypto sites and experts suggested it was a relief rally, with regulatory clarity seen as a positive for crypto investors.
What's not clear is whether the rally will be enough to break Bitcoin out of its trading range. It's been trading between US$35K and US$45K for weeks after a drop from a record price of US$68,990.90, according to data from CoinDesk.
Though there was an uptick in volume behind Wednesday's move, investors will be watching for sustained volume accompanying a breakout above the US$45,000 resistance level to signal a possible uptrend.
What Biden's order said
The order, titled "Ensuring Responsible Development of Digital Assets," directs federal agencies to submit reports on digital currencies and encourages regulators to ensure sufficient oversight is in place over digital assets.
It outlines the risks digital assets could pose to consumers, investors, businesses, the US financial system, national security, and climate, while also notes their potential benefits. The order calls on the agencies to support crypto innovation and ensure the US maintains "technological leadership in this rapidly growing space."
Bloomberg reported in October that the White House was weighing an executive order on cryptocurrencies, but the initiative's full scope had yet to be finalized. Crypto advocates have been concerned since, wondering what hawkish actions financial regulators would take on crypto.
The fact sheet released Wednesday outlined a constructive approach to addressing the potential positive and negative implications of the white-hot asset class. The White House didn't imply regulators should take a particular stance, but instead adopted a unified approach to promoting crypto's innovation, while balancing the security of investors and consumers.
Crypto investors were apparently relieved, and perhaps even bullish, on the order's tone and approach.
When will the White House start making crypto policy decisions?
The process likely won't be a quick one.
President Biden's order calls on federal agencies to conduct research and produce reports on various crypto-related issues. The order outlines the timeframe federal agencies have to submit their various findings, which range from three months for specific reports to a year for others.
The White House also noted that it will continue to work with agencies, Congress, allies and the private sector along the way, as it establishes policies, develops aligned international capabilities and works to support technological advances in digital assets.
For now, the lack of anything specifically worrisome seems to be what's moving the market up.
Bitcoin's support and resistance levels have been intact over the past couple months. So for the short term, investors will need to watch for a breakout above the US$45K resistance level on strong volume to signal a potential uptrend.
At the time of publication, Matt Miczulski owned BTC.