For the cryptocurrency industry, at least for the time being, Biden’s series of personnel appointments did release a hint of "good", but the market direction cannot be bet on one person or a group of people. From a fundamental point of view, if a new round of economic stimulus measures are implemented, some traditional market investors will indeed shift their attention to Bitcoin and gold. Coupled with the influence of other factors such as low interest rates, it is possible that the Bitcoin bull market will continue big.
On January 20, 2021, Biden finally moved into the White House as he wished. On that day, the price of Bitcoin was $37,653.44 and the Dow Jones Index was 31,188.38.
At the time of writing this article, Biden has been working as the President of the United States for two weeks, but the price of Bitcoin has plunged to $31,527.98, and the Dow Jones Index has fallen to 30937.04.
Obviously, the two major markets, the currency market and the stock market, have not given the 78-year-old US president "face", although his leadership team has certain encryption experience.
So far, Biden’s many staff appointments and cabinet members seem to be more tech-savvy than their predecessors. Some even have experience in the cryptocurrency industry. For example, former Ripple board director Michael Barr will replace Brian Brooks. (Brian Brooks) serves as the Director of the Office of the Comptroller of the United States Currency and is currently awaiting appointment and confirmation by the US Senate; and Gary Gensler, the former chairman of the US Commodity Futures Trading Commission (CFTC) and encryption expert, has confirmed his election to the US Securities Exchange Committee (SEC) chairman, Gary Kinsler was very optimistic about blockchain technology before, saying that it has the real potential to change the financial world and can reduce the cost and risk of the financial system, but also emphasized the issuer of the first token and the crypto exchange Operators should comply with local laws as much as possible.
However, now and then, once those who actively encouraged crypto innovation in the past sit in the position of regulators, the situation does not seem to be as good as people think, especially in today's dazzling bull market, the regulatory attitude is most likely not. As positive as the optimists hope.
The cryptocurrency market plummeted again this week. Bitcoin has approached the critical support level of $30,000. Can Biden really restore market confidence as everyone expects?
Can Biden rebuild the "dilapidated" economy?
Biden's life is actually not easy, especially when he faces the dilemma of the new crown virus epidemic and the big mess left by Trump. Fortunately, he will not rebuild the economy alone.
In the past week, practitioners in the crypto industry have paid close attention to the various personnel, secretaries and "chairmen" appointed by Biden. Among them, the three most important roles are:
In fact, among the above three roles, the Secretary of the Treasury of the United States is the "top priority". As expected by the industry, former US Federal Reserve Chairman Janet Yellen has passed the U.S. Senate Finance Committee and a full floor vote. Sit in this position. But for the cryptocurrency industry, Janet Yellen’s stance is not optimistic. Although she recently stated that she would adopt an "balanced measure" for the cryptocurrency industry, it seems that its first task is to restrict cryptocurrency.
Of course, the chairman of the US Securities and Exchange Commission and the chairman of the US Commodity Futures Trading Commission nominated by Biden are also very important, unlike Janet Yellen, Gary Gensler and Chris Brummer. All have a wealth of cryptocurrency and blockchain knowledge. Gary Kinsler is a 12-week cryptocurrency course taught by MIT Sloan at the Massachusetts Institute of Technology Business School.
He is also a fan of blockchain technology. Some people even predict that he will probably approve the Bitcoin Exchange Traded Fund (BTC ETF). ); And Chris Bloomer, who succeeded the chairman of the US Commodity Futures Trading Commission, has repeatedly submitted cryptocurrency bills to Congress and actively participated in several influential financial technology working groups.
On January 20, on the day of Biden’s inauguration, Janet Yellen made the first "cryptocurrency worry theory" and pointed out that the role of cryptocurrency in terrorist financing and money laundering activities was "worrying", which caused market turmoil. Perhaps it was unexpected that she had such a big influence. Janet Yellen quickly changed her mind on January 22 and stated in a written reply to the Senate Finance Committee that the United States must consider the benefits of cryptocurrency, which is very important. important. She emphasized that although cryptocurrency can be used to finance terrorism and other illegal activities, it is also possible to "improve the efficiency of the financial system" and said:
"I think we need to carefully study how to encourage its use for legal activities while reducing its use for malicious and illegal activities. If proven, I intend to work closely with the Federal Reserve Board and other federal bank and securities regulators to explore How to implement an effective regulatory framework for financial technology innovations such as cryptocurrencies."
Obviously, Janet Yellen’s attitude of “the child’s face changes when he says it changes in June” makes the cryptocurrency industry a little bit uncomfortable.
In this regard, industry insiders have expressed their views. For example, Circle CEO Jeremy Allaire tweeted that Janet Yellen’s follow-up remarks are more in line with the U.S. Treasury Department’s policy on cryptocurrencies since 2013, and the previous market’s reaction Excessive triggering of bull market selling; Bloomberg crypto columnist Tyler Cowen pointed out that Janet Yellen should provide the time needed for digital currency innovation and development, because cryptocurrency itself is difficult to supervise in many aspects, and regulators cannot easily control it as an abstract ledger.
In addition, the cryptocurrency market is global and will not rely solely on American financial recognition to exist; Kucoin International CEO Johnny Lyu also stated that the starting point of supervision is to promote the healthy development of the crypto industry, not to inhibit its innovation. Yellen gave two different regulatory attitudes within three days, indicating that the newly appointed US government does not have a clear direction for cryptocurrency regulation. KuCoin has always emphasized the importance of the compliance of cryptocurrencies and is actively cooperating with governments of many countries around the world to promote the compliance process of cryptocurrencies.
Ben Golub, a professor of economics and computer science at Northwestern University in the United States, even released an interesting picture (shown above) to describe the mood of the cryptocurrency market when he saw Janet Yellen, with normal Janet Yellen in it. There are also Janet Xiaolun, Janet Nurlen, Janet Ulun, and Janet Coolen.
Biden can't control inflation, and finally relies on Bitcoin?
On the other hand, Janet Yellen also needs to play an important role in the fiscal policy of the Biden administration. Biden has proposed another round of large-scale economic stimulus measures, which means that the Fed may soon start a "crazy money printing" model, which may stimulate many institutions to start turning to more safe-haven assets.
Quantum Economics analyst Thomas Kuhn, an encryption fund company, analyzed: "It is clear that the Biden administration does not allow deflation and does not allow debt levels to exceed GDP. They are willing to depreciate the currency to a certain extent. Such measures will directly affect asset prices. Impact. Currency prices are already at historical highs. Biden thinks he can control inflation, but that is not the case. It seems that inflation has begun to appear in the soft commodities and energy sectors."
According to a survey conducted by the Bank of America on large fund managers, short US dollar positions have become the "most crowded transaction" in the money market. Not only the Federal Reserve, but almost all central banks in the world do not have enough choices to control the current financial environment— -Therefore, fighting inflation has become one of the biggest consensus in 2021, and Bitcoin will undoubtedly play an important role in this process.
What is the reaction of the cryptocurrency market in any given week of Biden?
The biggest news in the cryptocurrency industry this week may be that Bitcoin fell below $30,000, but similar to the previous market decline, on-chain data analysis shows that large institutional investors are taking advantage of lower Bitcoin prices to "buy": January 22 On the same day, MicroStrategy CEO Michael Saylor revealed on Twitter that the company purchased another 314 BTC with US$10 million in cash in accordance with the fiscal reserve policy, with an average price of approximately US$31,808 per BTC. The total BTC holdings have reached 70,784.
According to analysis by SIMETRI chief Bitcoin analyst Nathan Batchelor, Bitcoin has fallen below the 200-period moving average during the H4 period (4-hour chart) for the first time since October 2020, leading to a major technical sell-off. In early February, a fierce battle between bulls and bears will be more encouraging. Bitcoin has fallen below the wedge shape and is currently staying near the $31,000 level, so it is important to observe the daily closing price of this area so that you can better understand more clues about the short-term direction of BTC.
Although Bitcoin still has the possibility of rushing to $50,000, if the current support pattern of $30,000 is not maintained, it is likely to encounter more serious corrections, such as last Friday (January 29) as high as $3.5 billion The Bitcoin option will expire, which is also the largest Bitcoin expiration option in history. As a result, the Bitcoin market has fluctuated upwards.
In order to cope with the upcoming market changes, some cryptocurrency exchanges have begun to deploy in advance. For example, OKCoin integrates the Bitcoin Lightning Network for users to make transactions cheaper and faster, while updating the UI interface and adding Earn functions; Kucoin has launched a trading robot for users to use for free. Trading robots can "arm" ordinary users to become more professional investors, and support ordinary users to implement more professional investment strategies with a zero threshold, such as grid trading and extremely fast fixed investment, so as to more easily profit in the encrypted market.
In addition to Bitcoin, the trend of Ethereum is also very worthy of attention, because this time Ethereum does not seem to be "in step with Bitcoin"!
Generally speaking, whenever Bitcoin falls, other cryptocurrencies will also fall, but this time Ethereum also fell below $1100 (as shown at the far left of the above figure), but since then, this market value ranks No. The second cryptocurrency began to recover and soared all the way to above $1,300. In addition, many DeFi token prices have also increased, such as Synthetic (SNX), Uniswap (UNI) and Aave (AAVE).
Quantum Economics analyst Thomas Kuhn explained that Ethereum is like the engine of these DeFi platforms. In the past year, DeFi has proven to be a reliable and innovative encryption concept and is expected to lead the next market leap. , Of course, Ethereum 2.0 pledge and NFT are also the main factors that help ETH appear to move opposite to Bitcoin.
In fact, cryptocurrency exchanges have also spared no effort in supporting the development of Ethereum. Many first-tier exchanges including Kucoin, Binance, OKex, etc. have successively supported ETH 2.0 pledges. Among them, Kucoin is the first to open the ETH 2/ETH trading pair, thus solving the problem of the lack of liquidity of the pledged ETH2 tokens.
It is worth mentioning that some investment institutions such as Coinbase and Gemini Exchange have been bullish on Ethereum, and they have also begun to try to hoard ETH. There are two reasons for this investment motivation:
1. The value storage potential of Ethereum continues to develop;
2. ETH is the foundation of Ethereum network transactions. With the development of projects such as DeFi and NFT, the status of ETH digital currency has gradually improved.
These may be the reasons why the market trend of Ethereum is different from that of Bitcoin.
My Conclusion
Although there are three fires for new officials, Biden does not seem to have too much capital to "set fire". After all, many issues such as epidemic response, climate change, racial equality, immigration, and economy need to be solved urgently by him.
For the cryptocurrency industry, at least for the time being, Biden’s series of personnel appointments did release a hint of "good", but the market direction cannot be bet on one person or a group of people. From a fundamental point of view, if a new round of economic stimulus measures are implemented, some traditional market investors will indeed shift their attention to Bitcoin and gold. Coupled with the influence of other factors such as low interest rates, it is possible that the Bitcoin bull market will continue big.
At least in the short term, the change in US government personnel should not really affect the development of Bitcoin and the broader cryptocurrency market.