CoinLoan Weekly: Executive order boosts prices, new crypto regulations, Fed’s interest hikes
After a low of $37,387.92 on Monday, March 7, the announcement of Joe Biden’s executive order on crypto pushed Bitcoin up. On Wednesday, March 9, it traded at around $42,000, reaching a 7-day high of $42,438.71. Subsequently, the price fell back to roughly $39,000 and stayed in a tight range for four days.
The trading volume remained low as investors were cautious ahead of the Fed meeting. Geopolitical uncertainty due to the Russia-Ukraine conflict contributed to the slowdown. The Fear & Greed index remained in the Extreme Fear zone.
As of now, BTC is trading at $38,960.10, with a 24-hour uptick of +0.4% and a 7-day change of +1.4%.
Ethereum moved similarly to Bitcoin. After the week’s low of $2,467.32 on Monday, March 7, the price skyrocketed to its 7-day high of $2,760.94 on Wednesday, March 9. Over the weekend, ETH remained in a narrow range under $2,600.
Like BTC, ETH rose slightly over the week. Following a dip in the early hours of Monday, March 14, it is moving upwards.
As of this writing, ETH is trading at $2,584.33, with a 24-hour change of +0.8% and a 7-day rise of +1.0%.
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XRP’s movements were notably different. The signing of the executive order pushed the price up only slightly. From Monday’s low of $0.715061 (March 7), XRP rose to around $0.77 and entered a narrow range between $0.725 and $0.750. On Saturday, March 12, it soared and peaked at $0.839807.
The rise followed the latest developments in the Ripple lawsuit. Striking down the SEC’s motion, the judge allowed Ripple to use its fair notice defense. According to this argument, neither the company nor its top executives received fair notice of violating securities law.
As of now, XRP is trading at $0.765602, with a loss of -2.7% over the past 24 hours and a gain of +5.3% over the past seven days.
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Development of crypto regulation speeding up around the world
On March 14, the ECOM (the EU’s Economic and Monetary Affairs Committee) voted on the final draft of its cryptocurrency regulation framework. It rejected a provision that would have prohibited Bitcoin across the EU due to the energy-intensive nature of Proof-of-Work.
According to Stefan Berger, rapporteur of MiCA (Markets in Cryptoassets framework), the package will help the EU create legal clarity and reliable regulatory structures. If the report is accepted as a whole in the final vote, this will send out “a strong signal for innovation”.
Lawmakers around the world have intensified their efforts to regulate crypto. Other notable developments included the following.
- The European Union has approved yet another sanction package against Russian government officials and oligarchs connected to the invasion of Ukraine. This time, the limitations concern cryptoassets.
- On March 9th, President Joe Biden signed an executive order calling on federal agencies to coordinate their efforts in crypto regulation. The administration has identified several priorities: protection of consumers, financial stability, illegal activity, the competitiveness of the United States, financial inclusion, and responsible innovation.
- The FinCEN (Financial Crimes Enforcement Network) has warned that Russia may use cryptocurrencies to circumvent the recently imposed U.S. sanctions. In particular, it may use CVC (convertible virtual currency) and anonymizers. According to Elliptic, Russia may use mining and hackers to evade the restrictions.
- The Dubai government has signed a law on virtual assets and established a regulatory body — Dubai Virtual Assets Regulatory Authority.
How Fed rate hikes could affect crypto and other assets
The Federal Reserve is poised to tighten its monetary policy in March 2022. Experts expect a series of interest rate increases to corral inflation. These changes are bound to affect crypto along with stocks, commodities, and other instruments.
Since the start of 2022, S&P 500, Dow Jones, and NASDAQ have been going downhill. Once touted as a cure for inflation, cryptocurrencies have been acting similarly. In November 2021, when the Fed announced tapering of bond purchases and possible rate increases, prices crashed. So far, compared to November’s peaks, BTC and ETH have lost over 44% and 48%, respectively.
According to Caleb Tucker, director of portfolio strategy at Merit Financial Advisors, higher rates will hinder growth. Dan Raju, CEO of Tradier, expects a net positive result. He suggests further declines will be eclipsed by the wider adoption of crypto by institutions and retail traders.
Currently, the market is being rattled by the Russia-Ukraine conflict. Faced with persistently high commodity prices exacerbating inflation, the Fed may tighten the rates further even if economic growth slows down.
Interest rates, inflation, and international conflict have created a stew of volatility, and investors may benefit from taking the long view. It is unclear how high the interest rates might go. Yet, according to Greg McBride, chief financial analyst for Bankrate, the economic fundamentals in the US are strong.