Bitcoin: Is tighter scrutiny likely?
As bitcoin’s price continues its breakneck rally, tighter rules may be on the horizon, depending on who forms Joe Biden’s new team.
- Bitcoin price climbs back above US$27,500 on Wednesday (30 December 2020) after paring gains a day earlier
- The cryptocurrency and its peers have attracted swelling interest, shattering price records in recent months
- However, there could be stricter oversight of the nascent cryptocurrency industry in the US
- Proposed rules include requirements for traders to disclose their identities
Bitcoin price seesaws after winning streak
Bitcoin's price dropped to as low as US$26,111 at about 13:14 GMT+8 on Tuesday (29 December 2020).
Since then, prices have recovered over 6%, hitting US$27,698 at 08:29 GMT on Wednesday (30 December 2020).
The digital coin had blasted past US$28,000 to an all-time high on Sunday (27 December 2020). This prompted cryptocurrency exchange Luno’s Vijay Ayyar to say that bitcoin may be ‘very close to the top’, although it could still possibly hit US$30,000.
An inevitable pullback in bitcoin’s price will likely be smaller than previous corrections, Ayyar added, noting that ‘we might only see 10-15% drops’.
The US Securities Exchange and Commission (SEC) also recently accused Ripple Labs, which markets the XRP token, of misleading investors and failing to abide by regulations on offering unregistered digital assets.
As a result, investors have been moving to bitcoin and other digital currencies, said Ayyar.
In recent months, investors have rushed to cryptocurrencies like bitcoin to hedge against US dollar weakness and inflation risk amid massive stimulus injections. Still, critics continue to doubt the long-term viability of cryptocurrencies as stable assets.
Why crypto’s future may hinge on Biden’s administration
Regulators may also soon scrutinise the world’s biggest cryptocurrency more closely, following its whirlwind rally and near quadrupling in price this year.
Possible headwinds could come from Joe Biden’s incoming administration. The industry has generally faced challenges with Democrats, who prefer more regulation and oversight, said CoinShares’ Meltem Demirors.
On the other hand, the US’ top currency regulator, Brian Brooks, warned that the new administration may roll back regulations meant to protect consumers. For example, national banks were allowed this July to provide cryptocurrency custody services, but this might possibly come undone with Biden in the White House, according to Brooks.
Any measures will depend on who fills the administration’s main roles. For instance, Janet Yellen, Biden’s pick to helm the Treasury Department, has said she is ‘not a fan’ of bitcoin, calling it ‘highly speculative’. Yellen has also commented on cybersecurity concerns around anonymous cryptocurrencies.
Forbes’ Roger Huang posited that one avenue the administration could take is Treasury-based enforcements that severely restrict or even ban self-hosted cryptocurrency wallets.
Over at the SEC, bitcoin-friendly Gary Gensler may also possibly replace Jay Clayton, viewed as anti-crypto, as chairman.
How to trade Bitcoin with IG
Are you feeling bullish or bearish on BTC?
Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Act on crypto opportunity
Discover the benefits of trading CFDs on cryptocurrencies with us:
- You don’t need to own any cryptocurrency
- Trade on bitcoin, ether and litecoin pairs
- Speculate on rising and falling markets
See opportunity on cryptos?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on cryptos?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade on 3 major cryptocurrencies and crosses
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on cryptos?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
