Updated: Jul 13, 2021
4 Reasons why the Biden Regime may be bad for your Crypto Portfolio...and at least one reason to be hopeful
Are you still holding on to your cryptos? If you are, then you have seen your portfolio take huge hits last week and there are reasons to believe that BTC may still have some distance to fall before a recovery phase is seen.
Joe Biden’s colourful inauguration on Wednesday may have something to do with why your portfolio has been in the red lately. A correction was always expected as I mentioned in the previous write up, but there is something in the tea leaves with the way the last week’s crash took place. Like we always emphasize here, markets are allergic to uncertainty and that’s what the inauguration of a new regime anywhere always comes with.
A new regime can mean anything; new colours at the white house, new spokesman/woman, a new tone and most likely new regulation. So what can we expect for Bitcoin in the Biden-Harris administration? We can only speculate based on the information we already have but here are some of the things that have investors holding their cards closer to their chests at the moment.
Regulation is a big divider in the crypto world. Some people want more regulatory clarity, while others dread the R-word. Ripple CEO Brad Garlinghouse has been having a rough few weeks because of the word, while crypto players in jurisdictions such as India would prefer the R-word over a blanket ban. A new administration means the cryptosphere could be shaken up at least in America and that is most likely going to inspire a ‘wait and see’ attitude among investors. If regulators become too invasive at least in the eyes of investors, then all the institutional money we have seen go into crypto recently could begin to dry up.
If you are an investor whether, in crypto or stocks, one woman’s name has quickly grabbed your attention over the last week. Janet Yellen inspires a lot of confidence for OG investors who have mastered traditional asset classes. She belongs to the Bitcoin is “rat poison” generation where the likes of Warren Buffet live. Whether or not she shares the same opinions about Bitcoin as Warren Buffet, she makes millennial and other investors who believe in crypto, quite nervous.
To some, her remarks recently confirmed the fears they had that the iron lady was not going to be good for Bitcoin. In a senate hearing on Tuesday, Yellen urged lawmakers to consider curtailing cryptos like Bitcoin due to concerns that they are “mainly” used to facilitate illegal activities. Though popular Bitcoiners such as Anthony Pompliano and NFL star Russell Okung came back with rebuttals, it is understood that regulators are more powerful than online talking heads. Yellen has all of us biting our fingernails with good reason; the only prayer we can offer is that we are not made to bite even harder.
ECB Chief Lagarde
Christine Lagarde is the second scariest woman for you as a crypto investor. It may be old news to most, but in case you missed it, she famously called for the regulation of Bitcoin globally almost two weeks ago. According to Lagarde, Bitcoin is highly speculative and has “conducted some funny business.” You may be wondering what the President of the European Central Bank’s utterances have to do with Joe Biden’s reign. Indeed it could be an overreaction on my part, but then again maybe not. If you pay no notice when two of the most powerful regulators agree on something, you are either the most relaxed investor in the world or the most uninformed. Lagarde’s utterances followed up by Yellen’s, who is a soon to be sworn in secretary of the US treasury, are indeed cause for concern.
Crypto VS Governments
We may have dismissed Mark Cuban for a while now when he said that governments wouldn’t allow their currencies to be usurped by Bitcoin, but now may be the time to pay attention. Just yesterday, long time crypto critic Harvard’s Kenneth Rogolf, brought up Cuban’s point. The possibility of future clashes with governments combined with Yellen’s and Lagarde’s statements paint a grim picture. Does the Biden administration view Bitcoin as a threat to the dollar? Time will tell. For more reading, check out this article from late last year.
Glimmer of hope
South of all that concerning material I have put you through, here lies some hope. Joe Biden has stepped into his new role with a decisive pen. Among a raft of changes effected at the executive order table is the suspension of a regulatory proposal that sought to compel exchanges to report transactions worth north of $10,000 at the Financial Crimes Enforcement Network (FINCEN). The proposal freeze was welcomed by crypto players who are now following closely what the next move by the Biden administration will be.
Gary Gensler’s inclusion in Biden’s transition team should also offer some reprieve. JP Theirot, the CEO of California-based crypto platform, Uphold, believes that Gensler will be good for Bitcoin and with good reason. Gensler has earned his stripes having played a key role in both the Clinton and Obama administrations. He is also one of the key architects of the Dodd-Frank Act that shaped America’s financial industry. More recently he took up a role at Massachusetts Institute of Technology (MIT) where he taught a course on Blockchain and cryptocurrencies. In Gensler, the Biden-Harris administration has a man that is in the intersection between the traditional asset classes and digital asset classes that may be a win for crypto enthusiasts. This op-ed he did back in 2019 is cause for more excitement because he termed cryptocurrencies and Blockchain as an “innovative irritant” and a “catalyst for change.”
Though conservative voices ring in our ears and give us sleepless nights at times, there is a lot of reason to believe in cryptocurrencies and the Blockchain. Other than the sheer ability to massively improve different Industries, it also hands power to individuals and not centralized entities. We march on but with caution.
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