President Joe Biden took the oath of office Wednesday, Jan. 20 at an inauguration ceremony that was strikingly different from past years due to the Covid-19 pandemic and security concerns following the Jan. 6 U.S. Capitol riots.
Bitcoin advocates hope Biden will take a more favorable stance towards cryptocurrency than President Donald Trump. Last year, Trump caused a shock in the crypto space when he tweeted an anti-Bitcoin tirade fueled by Facebook’s plans for its Libra cryptocurrency.
An encouraging sign for cryptocurrencies came this Monday when Biden announced he would tap former CFTC Chair Gary Gensler who’s shown himself to be crypto-friendly in the past to head up the SEC. While it is doubtful that Gensler will create a regulatory regime that the crypto industry will like, there is at least a reasonable chance of getting a clear regulatory framework. Also, fellow CFTC alumnus Jeffrey Bandman believes he may approve a Bitcoin exchange-traded fund.
How the Markets Reacted to the US Inauguration
Joe Biden’s stimulus plan has already spurred the stock market’s growth and is expected to drive more economic growth, higher interest rates, and more stock market growth.
However, the cryptomarket reacted differently as most crypto assets traded in the red. Bitcoin plunged to lows of $33,387 earlier today before recovering to its present price of $35,425.
BTC/USD Daily Chart
Major Altcoins followed in Bitcoin’s footsteps, Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH) are down by 6.56%, 7.48%, and 6.40% respectively in the last 24 hours.
Joe Biden, sworn in as the 46th President of the United States on January 20, has already offered a $1.9 trillion aid package to help people, boost vaccination efforts, and provide funds to state and local governments.
What a Biden Presidency Implies for Bitcoin (BTC) and Crypto
Some in the Bitcoin and cryptocurrency community see Gensler’s appointment as a sign that the Biden administration may bring other crypto-friendly individuals aboard. Perhaps the most direct way the Biden administration can influence Bitcoin is through various laws and regulations. This is appropriate for three reasons:
*The US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Office of the Comptroller of the Currency (OCC) will see a change of leadership. So will the Federal Reserve next year.
*The SEC is suing Ripple Labs and two executives for selling XRP in the form of unregistered securities, with implications for companies that did not conduct IPOs.
*The Financial Crimes Enforcement Network (FinCEN) is reviewing a set of rules that subject cryptocurrency transactions to more scrutiny.
Analysts however are quite speculative on what this may imply for Bitcoin price, Jesse Cohen, Senior Analyst at Investing.com, believes Biden’s presidency could hurt the value of cryptocurrency. Stating recently:
“While many expect the Bitcoin rally to continue in 2021, I’m more concerned with what the Biden administration could mean for cryptos, I expect Bitcoin to remain highly volatile to the downside in the new year, given the potential for more scrutiny and tighter regulation”
Incoming Treasury Secretary Janet Yellen, during her tenure as Fed Chair earlier described BTC as a highly speculative asset rather than a stable store of value, leading some to fear that President Biden may oversee the tightening of the regulation when it comes to cryptos.
On the contrary, Bitcoin proponents expect Biden’s presidency to take a more favorable stance towards crypto as inflation appears to be returning based on optimism about the COVID-19 vaccine rollout.
Image Credit: Shutterstock