Bitcoin rallies over $42k despite US regulation threat
Bitcoin has soared in value today in a surprise twist on the eve of Washington's planned regulatory overhaul of the industry.
The cryptocurrency market capitalisation has jumped 6.5% today, up to $1.91tn as US president Joe Biden is poised to sign the new regulatory order.
The order will also see Washington instruct agencies perform a study of the cryptocurrency sector and task the US Justice Department and Treasury to analyse the legal and economic ramifications of creating a US central bank digital currency
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However, despite the coming regulatory policy changes in the US, the world's preeminent cryptocurrency has soared by nearly 8.5% in value in the last 24 hours.
Bitcoin has reached $42,245, whilst other cryptocurrencies have performed well with ethereum climbing over 6.5% in the last 24 hours to $2,755.
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The text of the order has been in the works for months, and the Bloomberg news outlet says it obtained some of the details.
The main points in the order are instructions to begin a government-wide effort to study cryptocurrencies and their effects on the US economy.
The order is expected to give the US State Department the task of working with foreign powers on new regulatory measures for monitoring cryptocurrency trade across international borders.
Another detail that has been obtained is an instruction to see that the US Treasury Department analyses the use of cryptocurrencies in financial crime and their effect on the environment.
One of the most significant details of Biden's cryptocurrency order is a direction to see the US Federal Reserve study the possibility of launching a US central bank digital currency, or "digital dollar".
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The US Federal Reserve released a report on this in January where it described a “potential US central bank digital currency that could provide a safe, digital payment option for households and businesses as the payments system continues to evolve”.
The report stressed that the development of a US central bank digital currency would “fundamentally change the structure of the US financial system, altering the roles and responsibilities of the private sector and the central bank”.
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Marcus Sotiriou, an analyst at the UK-based digital asset broker GlobalBlock has discussed the increasing trend of institutions finding ways to gain exposure to bitcoin exchange traded funds (ETFs).
Mr Sotiriou said: "Bitcoin rallied 9% to over $42,000 this morning, as key points from Joe Biden’s executive order on crypto have been leaked.
"The order seems relatively benign, hence giving the market some clarity."
He described "investors being prepared for the downside risks of this event by waiting on the sidelines, and we are seeing many buy bitcoin back in what appears to be a spot-driven rally".
Bitcoin has been very bearish for the last few months and has been sliding downwards since its all-time high of $64K in November 2021.
Leading technical analyst Benjamin Cowen has pointed to a ratio that factors in the realised market cap of bitcoin to its thermo capitalisation, which is the sum of bitcoin miner revenue.
The price of bitcoin correlates with this ratio as charts reveal that when the ratio goes up, so does the price of bitcoin.
Cowen said on his influential Youtube channel that "in this market cycle we have not seen a higher high on this metric".