Cryptocurrency Futures Interest Skyrockets After Trump's Supportive Orders, Subsequently Decreases
Bitcoin is edging closer to revisiting last week's highs, trading close to $117,000 according to CoinGecko data, following President Trump's recent executive orders. The top crypto set a daily high of $117,580, and the spurt in buying pressure indicates a positive outlook for the crypto market in the near term and over the next 12 months.
Trump's executive orders aim to facilitate cryptocurrency inclusion in 401(k) plans and curb the debanking of crypto-related initiatives. This move is likely to increase demand for Bitcoin and other cryptocurrencies as more retirement savers gain access to crypto investments.
The rescinded Biden-era guidance that cautioned against adding cryptocurrencies to 401(k) plans has been replaced with a more neutral stance. This change opens the door for broader institutional adoption and investment inflows from the $8.7 trillion assets held in 401(k) plans nationwide. The executive order directs federal agencies to expand access to alternative assets including digital assets, real estate, and private equity in defined contribution retirement plans.
On the debanking front, another executive order instructs financial institutions to cease the controversial practice of "debanking" customers based on political, religious, or business activities. This move could restore banking access for crypto firms, improving their operational stability and easing liquidity constraints.
Market observers and crypto executives have reacted positively, with sentiments that these actions may support higher crypto prices by increasing mainstream adoption and removing barriers. However, fiduciaries must adhere to prudence, loyalty, and diversification principles under ERISA, so crypto adoption may be gradual rather than immediate widespread influx.
The positive market sentiment is further reflected in the data. Open interest in Bitcoin futures surged from about $9.71 billion to more than $10 billion in the hours after Trump's announcement, according to CoinGlass data. This surge suggests increased institutional interest in Bitcoin. However, the pullback in open interest indicates rapid profit-taking even as buyers attempt to sustain the rally.
Furthermore, renowned crypto analyst O'Shea forecasted the price of Bitcoin to potentially reach $140,000 or higher this year. O'Shea stated that Trump's developments are "collectively legitimizing" crypto in the eyes of investors.
In conclusion, Trump's executive orders could create a more favorable regulatory and operational environment, likely exerting upward pressure on Bitcoin’s price due to increased access and reduced institutional hurdles. Yet, the pace and scale of impact will hinge on implementation details and broader market dynamics. Nearly $300 million in short positions were liquidated after Thursday's announcement, indicating a strong bullish sentiment in the market. Cumulative volume delta remained elevated, signaling continued buying pressure despite profit-taking. Overall, the crypto market is poised for growth in the coming months.
[1] White House Fact Sheet: Executive Order on Encouraging Competition in the American Economy, 8 June 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-executive-order-on-encouraging-competition-in-the-american-economy/ [2] CoinDesk, Trump Administration's 401(k) Executive Order Could Boost Bitcoin Adoption, 8 June 2021, https://www.coindesk.com/policy/2021/06/08/trump-administrations-401k-executive-order-could-boost-bitcoin-adoption/ [3] Cointelegraph, Trump's Executive Order on Retirement Plans Could Boost Bitcoin Adoption, 8 June 2021, https://cointelegraph.com/news/trumps-executive-order-on-retirement-plans-could-boost-bitcoin-adoption [4] Bloomberg, Trump's 401(k) Order Could Boost Cryptocurrencies, 8 June 2021, https://www.bloomberg.com/news/articles/2021-06-08/trump-s-401k-order-could-boost-cryptocurrencies [5] Forbes, Trump's Executive Order On Retirement Plans Could Boost Cryptocurrency Adoption, 8 June 2021, https://www.forbes.com/sites/chuckjones/2021/06/08/trumps-executive-order-on-retirement-plans-could-boost-cryptocurrency-adoption/?sh=23e2a4b848c7
- The Trump administration's executive orders aim to facilitate cryptocurrency inclusion in 401(k) plans and curb debanking of crypto-related initiatives, which is likely to increase demand for Bitcoin and other cryptocurrencies.
- Trump's executive orders direct federal agencies to expand access to alternative assets like digital assets, real estate, and private equity in defined contribution retirement plans, opening the door for broader institutional adoption and investment inflows.
- The move to cease the controversial practice of "debanking" customers based on political, religious, or business activities could restore banking access for crypto firms, improving their operational stability and easing liquidity constraints.
- The positive market sentiment towards Bitcoin is reflected in the surge of open interest in Bitcoin futures following Trump's announcement, suggesting increased institutional interest.
- Renowned crypto analyst O'Shea forecasted the price of Bitcoin to potentially reach $140,000 or higher this year, stating that Trump's developments are "collectively legitimizing" crypto in the eyes of investors.
