Crypto-supportive orders by Trump cause an increase in Bitcoin futures open interest, followed by a subsequent decrease.
The recent executive orders from the White House, including the inclusion of cryptocurrency in 401(k) plans and the prohibition of debanking of crypto-related initiatives, are expected to have a positive impact on the crypto market. These actions are seen as potentially bullish for Bitcoin's price and the broader crypto market.
Opening up 401(k)s—retirement savings accounts with trillions in assets—to crypto investment could significantly expand mainstream investor access to digital assets, thus increasing demand and market liquidity. Simultaneously, directing financial institutions to cease debanking crypto businesses addresses long-standing industry concerns about restricted access to banking services, which could enable smoother operations and institutional participation in the crypto sector.
The executive order rescinds previous stringent guidance that urged "extreme care" in offering crypto in 401(k)s, replacing it with a "facts and circumstances" standard. This aligns crypto investments with fiduciaries’ usual duties to evaluate risks prudently rather than pre-emptively excluding them. By reducing regulatory and litigation risks around alternative assets in retirement plans—including crypto, private equity, and real estate—the order aims to democratize access to these assets, potentially boosting adoption and inflows from millions of retirement investors holding $8.7 trillion across 401(k)s.
The order to prohibit "debanking" based on politics, religion, or business activities (including crypto) addresses a major friction point for the crypto industry, improving banking relationships critical for liquidity, exchange operations, and crypto-related business growth.
These executive actions can heighten investor confidence, lower barriers to entry for institutional and retail participation, and create a more crypto-friendly regulatory environment. This is expected to support appreciation in Bitcoin’s price and reinforce positive momentum across the crypto market by broadening adoption and reducing operational risks.
However, the actual market impact will depend on how regulatory agencies implement these directives and how investors respond over time. The spurt in buying pressure for Bitcoin is evident, with open interest in Bitcoin futures surging from about $9.71 billion to more than $10 billion in the hours after Trump's announcement. Nearly $300 million in short positions were liquidated after Thursday's announcement, indicating a strong bullish sentiment.
Despite the bullish outlook, the pullback in open interest and the elevated cumulative volume delta suggest continued pressure on the bulls in the short term. The bulls faced forced daily closures of, on average, $275 million due to Bitcoin's choppy and gradual price decline over the past three weeks. The top crypto, Bitcoin, jumped 2.3% from Thursday's open to set a daily high of $117,580, but it is close to revisiting last week's highs.
Gerry O'Shea, head of global market insights at Hashdex, stated that while the executive orders are positive for the industry and investors, they do not anticipate this action alone having an outsized impact on near-term prices. However, O'Shea predicts strong performance for those who invest in crypto over the next 12 months, with Bitcoin potentially reaching $140,000 or higher this year based on his analysis.
In conclusion, the developments from the White House could set up investors for strong performance in crypto over the next 12 months. The increased regulatory clarity and mainstream adoption potential from the executive orders are expected to boost the crypto market's growth and confidence.
- The recent executive orders, which include opening up 401(k)s to crypto investments and prohibiting debanking of crypto-related initiatives, could significantly increase mainstream investor access to digital assets like Bitcoin and Ethereum.
- These executive actions could potentially reduce regulatory and litigation risks around alternative assets in retirement plans, such as crypto, private equity, and real estate, thus democratizing access to these assets.
- The executive order to prohibit debanking based on politics, religion, or business activities, including crypto, could improve banking relationships critical for liquidity, exchange operations, and crypto-related business growth.
- These executive actions are expected to support appreciation in Bitcoin’s price and reinforce positive momentum across the crypto market by broadening adoption and reducing operational risks.
- Gerry O'Shea, head of global market insights at Hashdex, predicts strong performance for those who invest in crypto over the next 12 months, with Bitcoin potentially reaching $140,000 or higher this year based on his analysis.
