Bitcoin is here to stay, and cryptocurrency investors everywhere are celebrating. President Biden has placed his John Hancock on an executive order that validates cryptocurrencies. The bitcoin price has climbed 10% higher in response to above the $42,000 level, as investors exhale after a prolonged market downturn. Investors were waiting on pins and needles to see which way the regulatory pendulum would swing, and as it turns out, the US has decided if you can’t beat them, join them.
In a nutshell, the US wants to be competitive on crypto rather than making tech innovation unwelcome and sending it overseas. It’s a long time coming. President Biden’s order tasked policymakers with researching the pros and cons of cryptocurrencies, exploring the introduction of a US digital currency, and crafting regulation. Cryptocurrency market leaders are not opposed to rules; they just want them to be fair, which appears to be the order’s intent. The crypto community views the glass half full while crypto critics are licking their wounds.
In response, all the top-10 cryptocurrencies based on market cap are currently trading in the green, a welcome sign to investors who have stuck it for crypto winter. Whether or not it’s the start of a bullish market cycle remains to be seen, but the signs are promising.
Billionaire entrepreneur Elon Musk was among the first to respond. In a nod to Bitcoin creator Satoshi Nakamoto, the Tesla chief tweeted an image with some clues suggesting that the rules will be good for bitcoin. Musk has been among crypto’s biggest advocates as well as a critic. After adding support for bitcoin payments at the electric vehicle maker, Musk later changed his mind, blaming the energy consumption of mining new bitcoins and securing the blockchain, a process known as mining. Crypto projects have been moving in a more environmentally friendly direction lately, including relying on a more sustainable electricity mix. The Bitcoin Mining Council’s mission is to provide transparency on bitcoin mining.
— Elon Musk (@elonmusk) March 9, 2022
Inflation is running amok in the economy, and consumer prices are not expected to come down anytime soon. Energy costs have been a thorn in the side of consumers, with gas prices around the country soaring through the roof to record highs. Americans face a perfect storm, and bitcoin is one asset that could withstand the pressure. The problem is that bitcoin has not been trading like the inflationary hedge it is designed to be, despite its finite supply of 21 million coins. Instead, it has been acting more like a tech stock, giving investors little retrieve from the risk-off environment.
Now that bitcoin has the regulatory wind at its sails, it seems that the tide has turned. Dan Held, director of growth marketing at crypto exchange Kraken, suggests the stars have aligned for a “bitcoin supercycle,” pointing to reasons such as “20-year inflation highs” and “huge bitcoin awareness and accessibility.”
All the pieces are in place for a #Bitcoin supercycle:
– World reserve currencies being challenged
– 20 year inflation highs
– Huge Bitcoin awareness and accessibility
– War/Pandemic eroded trust in institutions
— Dan Held (@danheld) March 9, 2022
Indeed, bitcoin adoption was already on the rise even without a clear regulatory framework. According to the White House, 40 million Americans have already dabble in bitcoin. Now that the guardrails are going to be put in place, and it is apparent they won’t stifle innovation, the sky’s the limit in terms of wide-scale adoption of cryptocurrencies. Out in Wyoming, US Senator Cynthia Lummis is readying a bill that would embed cryptocurrencies into the US financial system, the chances for which seem more probable today than they did yesterday.
It’s been a long time coming, but my bill to fully integrate digital assets into our financial system is almost ready! I’m putting the final touches on it with some key advocates and partners in the Senate, but watch out for an unveiling soon! pic.twitter.com/gpHh2JVgKd
— Senator Cynthia Lummis (@SenLummis) March 9, 2022
Financial institutions and others waiting on the sidelines for a regulatory green light are likely to start dipping their toes into the crypto waters. If the bullish response to President Biden’s executive order on crypto is a harbinger of things to come, investors could be in for a wild ride.
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