Last week, U.S. President Joe Biden signed an executive order to direct agencies to examine cryptocurrencies. The non-news sent Bitcoin from $38,500 to $42,000. The next day, the rally faded as Bitcoin closed at $39,000.
What does the governmental order mean?
President Biden wants to position the U.S. at the forefront of technological crypto innovation. The plan will involve exploring a U.S. central bank digital currency, The Fed’s January 2022 discussion paper, and plans to enact legislation for stablecoins.
Bitcoin, crypto, platforms, and cryptocurrency miners all soared on March 9 after the news. Speculators were relieved that Biden did not introduce any tough regulations yet. Still, the government will eventually introduce a central banking system for digital that hurts the value of crypto.
The whole point of crypto is a decentralized exchange. Once the government regulates it, the value of a digital currency will weaken. The exchange does not want a U.S. Central Bank digital currency. This would require users to give up their privacy and autonomy.
Fortunately, DeFi, or decentralized finance, is under development. DeFi provides trust through a public blockchain. As a result, multiple entities may independently verify transactions. This removes the need for a centralized source.
Expect crypto volatility to continue. Nasdaq’s steep correction, higher interest rates, and inflation will have a direct effect on crypto prices this week.
