Bitcoin prices slipped below $40,000 levels on Friday after U.S. President Joe Biden issued an executive order to draft cryptocurrency regulations.
Most cryptocurrencies edged lower in choppy trade on Friday, with Bitcoin prices falling below $40,000 as rising inflation and Russia's escalating military campaign against neighbouring Ukraine dented investors' appetite for riskier assets. Investors remained on edge after U.S. President Joe Biden issued a long-awaited executive order to draft cryptocurrency regulations.
The order came at a time when the U.S. and its western allies have imposed harsh sanctions on Russia, including a ban on Russian banks prohibiting them from accessing the SWIFT international payments network. The U.S. lawmakers are concerned that Russia is using cryptocurrencies to evade sanctions placed on its banks, financial institutions, and oil industry.
Bitcoin (BTC), the world’s largest cryptocurrency by market capitalisation, was trading 0.3% lower at $39,122 apiece after hitting a low of $38,251 in the last 24 hours. BTC price has fallen as much as 6% in the past seven days and 18% in 2022 (year-to-date or YTD) so far. It currently is trading 43% lower than its all-time high of $68,789 touched in November last year.
Meanwhile, alternative cryptocurrencies (altcoins) edged higher, with Ethereum, the world's second-largest cryptocurrency, trading 0.16% higher at $2,599. The coin linked to the ethereum blockchain has dropped 5.3% in the past one week.
Among others, digital tokens such as Tether, BNB, Cardano, Solana edged lower, while Terra, Polygon, Stellar, XRP, Litecoin, Uniswap gained marginally over the last 24 hours.
The largest meme coin, Dogecoin, was up 0.16%, while its counterpart Shiba Inu fell 2%.
Meanwhile, the global cryptocurrency market capitalisation stood at the $1.75 trillion mark, up 0.1% in the last 24 hours. However, market volume declined 14.27% to $80.64 billion over the last 24 hours, as per coinmarketcap.com.
Joe Biden's move spooks crypto market
The crypto market has witnessed sharp volatility in the wake of the Russia-Ukraine crisis and sharp rally in commodity prices, as investors tend to reduce their risk portfolio and shift focus to safer assets such as gold and dollar. U.S. President Joe Biden’s executive order to federal agencies to focus on cryptocurrency regulations also weighed on market sentiment.
In a first-of-its-kind executive order, President Biden directed federal agencies to coordinate on the development of cryptocurrency regulations. In a statement issued on March 9, the White House said that President Biden will sign an executive order outlining the first-ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. The order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
As per the release, digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap in November last year and up from $14 billion just five years prior. Surveys suggest that around 16% of adult Americans — approximately 40 million people — have invested in, traded, or used cryptocurrencies. Over 100 countries are exploring or piloting central bank digital currencies (CBDCs), a digital form of a country’s sovereign currency, it added.
Will Biden’s order impact global cryptos?
U.S. President Biden’s executive order on cryptos has received mixed reactions from market experts.
Charles Tan, head of marketing at Coinstore said: “We are delighted to see the U.S. taking concrete steps towards launching the digital dollar and regulating crypto assets for the benefit of the citizens. Though he has signed the order now, the buzz around the digital version of the dollar has been around for quite some time.”
“The regulation of crypto in the U.S. will have a long-lasting positive impact on the global crypto market and we will see a large influx of funds into the crypto industry by retail and institutional investors. The crypto community across the globe will keep a close watch on the U.S. developments and we hope that something positive comes out of it,” Tan added.
Jay Hao, CEO of OKX.com, said, “The executive order signed by Joe Biden may have spooked the global crypto market which might be the reason that bitcoin is below $40,000 and is expected to hover around that level for some time.”
“Dubai has made some positive announcements related to virtual assets by forming ‘Dubai Virtual Assets Regulatory Authority’ which is expected to spark investors' interest in the days to come. Even though the crypto market cap has witnessed a drop due to geopolitical uncertainties, the trading volumes have seen a healthy jump in the last 24 hours which indicates that investors are holding onto their investments for creating long-term wealth,” Hao added.
Commenting on the development, Ketan Surana, director, Coinsbit India, says, “The proposed laws make crypto investment very stringent because of harsh taxation norms. Still, over time all the key stakeholders will try to influence and bring reforms in India that will make investments in crypto assets ideal.”
Surana further says “The recent developments have made it certain that the Indian government is skimming the positive side of crypto assets. Additionally, the global scenarios have ensured that the prices of the same are favourable for Indian Investors to invest in them.”