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Bitcoin and other cryptocurrencies fell on Thursday as some of the initial excitement around U.S. President Joe Biden’s executive order on digital assets faded.
Bitcoin was last down more than 5% at $39,637.11, according to Coin Metrics.
On Wednesday, bitcoin rose to as much as $42,577 after starting the day trading at around $38,744.
“There are multiple factors at play right now. The broader equity market is down, reacting to macro level events. And those same macro level events are usually also driving crypto markets down because a lot of people are still viewing crypto as an investment vehicle,” said Sara Xi, chief product officer at Prime Trust.
“Crypto is more than an investment vehicle,” she added. “It’s a store of value, it’s a currency. Those factors sometimes counteract and push price up, [but] today the have macro level events — oil price, the situation in Russia and Ukraine — is overpowering everything.”
Wednesday’s spike came as optimism around Biden’s executive order on cryptocurrencies mounted. The order focuses on six key areas: consumer protection, financial stability, illicit activity, U.S. competitiveness in the industry, financial inclusion and responsible innovation.
Some high-profile cryptocurrency industry players praised the U.S. government’s move. Cameron Winklevoss, co-founder of the Gemini cryptocurrency exchange, called it a “watershed moment.”
But not everyone was convinced.
“The executive order is, more than anything, defensive. The main goals of the EO are to protect the US’ financial position globally, make sure US regulations (both federal and global) are not circumvented using crypto, make sure crypto investors and users are protected legally, and that crypto as an industry is regulated in general,” said Guy Gotslak, co-founder of cryptocurrency investment platform My Digital Money.
“These are not bad; we all want the same thing. We want to protect investors, especially the small ones. But the EO does not direct the government to take proactive steps to nurture the growth of technology.”
While the order was seen as a positive by most in the industry, it wasn’t the main price driver as bitcoin bounced Wednesday or when it reversed course Thursday.
Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said the executive order was “overall more positive or neutral.”
“Hence while the market reacted positively to the statement, momentum wasn’t strong enough to surpass resistance” at $42,000, he said.
“What we can see is that Bitcoin is broadly range bound, unable to make a strong move on either side, coupled with ongoing uncertainty about Ukraine,” Ayyar added.
— CNBC’s Tanaya Macheel contributed reporting.