Author: Bai Ye, Editor: Black Earth
Produced by: Carbon Chain Value (ID: ccvalue)
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 US dollars, and the Dow Jones Index was 31,188.38 points.
At the time of writing, 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 also fallen to 30937.04 points.
Obviously, the two major markets, the currency market and the stock market, did not give the 78-year-old US president "face", although his leadership team has certain encryption experience.
So far, many of Biden's staff appointments and cabinet members seem to be more tech-savvy than their predecessors, some even have experience in the cryptocurrency industry, such as former Ripple board director Michael Barr (Michael Barr) will replace Brian Brooks (Brian Brooks) serves as the U.S. Comptroller of the Currency and is currently awaiting the appointment and confirmation of the U.S. Senate; Gary Gensler, the former chairman of the U.S. Commodity Futures Trading Commission (CFTC) and encryption expert Gary Gensler, has been confirmed for election to the U.S. Securities and Exchange Commission. The chairman of the Commission (SEC), Gary Gensler, 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 he also emphasized that initial coin issuers and encrypted exchanges Operators should comply with local laws as much as possible.
However, from time to time, once those who actively encouraged encryption innovation in the past sit in the position of regulators, the situation does not seem to be as good as people imagined, especially in today's dazzling bull market, the regulatory attitude is likely to be different. Be as positive as an optimist would like.
The cryptocurrency market has plummeted again this week, and Bitcoin has approached the key support level of $30,000. Can Biden really restore market confidence as everyone expects?
01. Can Biden rebuild the "broken" economy?
Biden's life is actually not easy, especially in the face of the new crown virus epidemic and the mess left by Trump. Fortunately, he will not rebuild the economy alone.
In the past week, practitioners in the encryption industry have paid close attention to the various personnel, secretaries and "chairmen" appointed by Biden. Among them, there are three most important roles, namely:
Chairman of the Securities and Exchange Commission
Chairman of the U.S. Commodity Futures Trading Commission
secretary of the us treasury
In fact, among the above three roles, the U.S. Secretary of the Treasury is the "top priority". As expected by the industry, former U.S. Federal Reserve Chairman Janet Yellen has passed the U.S. Senate Finance Committee and the full floor vote. took this position. But for the cryptocurrency industry, Janet Yellen's stance is not optimistic. Although she recently said that she will take a "balanced approach" to the encryption industry, it seems that her top priority is still to restrict cryptocurrencies.
Of course, Biden's nominees for SEC chair and CFTC chair are also important, unlike Janet Yellen, Gary Gensler and Chris Brummer Both have extensive knowledge of cryptocurrencies and blockchain. Gary Gensler teaches a 12-week cryptocurrency course at the MIT Sloan School of Business at the Massachusetts Institute of Technology. He is also a fan of blockchain technology. ); and Chris Blumer, who succeeded the chairman of the US Commodity Futures Trading Commission, has submitted cryptocurrency bills to Congress many times and actively participated in several influential financial technology working groups.
On January 20, on the day of Biden's inauguration, Janet Yellen first threw out "cryptocurrency concerns", pointing out that the role of cryptocurrencies in terrorist financing and money laundering activities was "worrying", which caused market turmoil. Perhaps not expecting that she has such a big influence, Janet Yellen quickly changed her tune on January 22. In a written reply submitted to the Senate Finance Committee, she stated that the United States must consider the benefits of cryptocurrencies, which is very important. important. She emphasized that while cryptocurrencies can be used to finance terrorism and other illicit activities, they also have the potential to "improve the efficiency of the financial system," saying:
“I think we need to take a closer look at how to encourage its use for legitimate activities while reducing its use for malicious and illicit activities. If confirmed, I intend to work closely with the Federal Reserve Board and other federal banking and securities regulators to explore How to implement an effective regulatory framework for fintech innovations such as cryptocurrencies.”
Obviously, Janet Yellen's attitude of "changing the face of the child in June" has made the cryptocurrency industry somewhat puzzled.
In this regard, people in the industry have expressed their views. For example, Circle CEO Jeremy Allaire tweeted that Janet Yellen’s follow-up remarks are more in line with the US Treasury’s policy on cryptocurrencies since 2013, while the previous market reaction Excessive triggering of bull market selling; Bloomberg's encryption columnist Tyler Cowen pointed out that Janet Yellen should provide digital currencies with the time needed for innovation and development, because cryptocurrencies themselves are difficult to regulate in many ways, and regulators cannot easily control them as abstract ledgers Moreover, the cryptocurrency market is global and will not rely entirely on US financial recognition; Johnny Lyu, CEO of KuCoin International, also stated that the starting point of regulation is to promote the healthy development of the encryption industry, not to inhibit its innovation. Yellen gave two different regulatory attitudes within three days, indicating that the newly appointed U.S. government does not have a clear direction for cryptocurrency regulation for the time being. KuCoin has always emphasized the importance of the compliance of cryptocurrencies, and is actively cooperating with governments around the world to promote the compliance process of cryptocurrencies.
Ben Golub, a professor of economics and computer science at Northwestern University, even released an interesting picture (shown above) to describe the mood of the cryptocurrency market seeing Janet Yellen at this time. There is a normal Janet Yellen in it, And Janet Laughlin, Janet Nurren, Janet Nurren, and Janet Nurren.
02. Biden can't control inflation, and finally relies on Bitcoin?
On the other hand, Janet Yellen also needs to play a major role in the fiscal policy of the Biden administration. Biden has proposed another round of massive economic stimulus, which means the Fed may soon be back in "money-printing frenzy" mode, potentially spurring many institutions to switch to more safe-haven assets.
Thomas Kuhn, an analyst at Quantum Economics, an encryption fund company, said: "Obviously, the Biden administration does not allow deflation and increases in debt levels beyond GDP. They are happy to devalue the currency to a certain extent. This measure will have a direct impact on asset prices. Impact. Currency prices are already at historically high levels, Biden thought he could get inflation under control, but it doesn’t, it looks like inflation is starting to show up in soft commodities and energy.”
According to the results of a survey of large fund managers by Bank of America, shorting the dollar has become the "most crowded trade" in the currency market today. Not only the Fed, but almost all central banks in the world do not have enough options to control the current financial environment — — Therefore, fighting inflation has become one of the biggest consensus in 2021, and Bitcoin will undoubtedly play a major role in this process.
03. What is the reaction of the cryptocurrency market in the week after Biden took office?
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 the low price of Bitcoin to "buy": January 22 On the 1st, MicroStrategy CEO Michael Saylor revealed on Twitter that the company purchased another 314 BTC with US$10 million in cash according to the fiscal reserve policy, with an average price of about US$31,808 per piece, and the total BTC holdings have reached 70,784.
According to the analysis of Nathan Batchelor, chief bitcoin analyst at SIMETRI, bitcoin fell below the 200-period moving average in the H4 period (4-hour K-line trend) for the first time since October 2020, leading to a major technical sell-off. In early February, the battle between bulls and bears will be even more motivating. Bitcoin has broken below the wedge formation and is currently holding around $31,000, so it is important to watch the daily close in this area for more clues about where BTC is headed in the short term.
Although Bitcoin still has the possibility of rushing to $50,000, if the current support pattern of $30,000 cannot be maintained, it is likely to encounter a more serious correction, such as last Friday (January 29) as high as $3.5 billion Bitcoin options will expire, and it is also the largest bitcoin expiration option ever, resulting in upward volatility in the bitcoin market.
In order to cope with the upcoming market changes, some cryptocurrency exchanges have begun to deploy in advance. For example, OKCoin integrated the Bitcoin Lightning Network for users to make transactions cheaper and faster, and at the same time updated the UI interface and added the Earn function; KuCoin launched a trading robot for users to use for free. Trading robots can "arm" ordinary users into more professional investors, and support ordinary users to implement more professional investment strategies with zero threshold, such as grid trading and fast fixed investment, so as to make it easier to make profits in the encrypted market.
In addition to Bitcoin, the trend of Ethereum is also 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 $1,100 (as shown on the far left of the above chart), but since then, this market value ranks No. 1 The second cryptocurrency began to recover and soared all the way above $1,300. In addition to this, many DeFi tokens also saw price increases, such as Synthetic (SNX), Uniswap (UNI) and Aave (AAVE).
Thomas Kuhn, an analyst at Quantum Economics, an encryption fund company, explained that Ethereum is like the engine of these DeFi platforms. In the past year, DeFi has proven to be a reliable innovative encryption concept and is expected to lead the next market leap. , Of course, the Ethereum 2.0 pledge and NFT are also the main factors that help ETH appear in the opposite direction of Bitcoin.
In fact, cryptocurrency exchanges have also spared no effort in supporting the development of Ethereum. Many first-line exchanges including KuCoin, Binance, OKex, etc. have successively supported ETH 2.0 pledge. Among them, KuCoin is the first to open the trading pair of ETH 2/ETH, thus solving the problem of lack of liquidity of pledged ETH2 tokens.
It is worth mentioning that some investment institutions such as Coinbase and Gemini Exchange are 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 basis of Ethereum network transactions. With the development of projects such as DeFi and NFT, the status of ETH digital currency is gradually improving.
These may all be the reasons for the different market movements of Ethereum and Bitcoin.
04. Summary
Although the new official took office with three fires, Biden does not seem to have much capital to "set fire". After all, many issues such as epidemic response, climate change, racial equality, immigration, and the economy need to be resolved urgently.
For the cryptocurrency industry, at least for now, Biden's series of personnel appointments do release a "good" atmosphere, but it is impossible to bet on one person or a group of people on the market trend. From a fundamental point of view, if a new round of economic stimulus measures is implemented, some traditional market investors will indeed shift their attention to Bitcoin and gold, coupled with low interest rates and other factors, the possibility of the Bitcoin bull market continuing very big.
At least in the short term, the change of personnel in the US government should not really affect the development of Bitcoin and the broader cryptocurrency market.
