The share prices of crypto mining companies took a big bounce on Wednesday after President Biden released an executive order related to digital assets.
This order could bring sweeping regulation to the crypto industry, but that's actually being viewed as a good thing for cryptocurrencies.
Some of the biggest movers Wednesday were crypto-related companies. At various points during the trading session, Canaan (NASDAQ: CAN) was up by as much as 13.2%, Hut 8 Mining (NASDAQ: HUT) was up by 13.8%,
HIVE Blockchain Technologies (NASDAQ: HIVE) was up by 11.6%, Bit Digital (NASDAQ: BTBT) was up by 13.1%, and Riot Blockchain (NASDAQ: RIOT) popped by 13.8%. These stocks didn't hold their peak prices but were all still up sharply as the market closed.
President Biden's executive order essentially asks most government agencies to outline opportunities and risks for digital assets. That includes asking the Federal Reserve to look into central bank digital currencies (CBDCs), cross-border transactions, and innovation in the digital asset market.
The tone of the document was actually positive for cryptocurrencies and digital assets, which should be good for everyone from cryptocurrency holders to Web 3.0 developers.
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It also could mean that miners will be given steady rules, rather than constantly being under the threat of inconsistent regulations.
The crypto industry broadly has been asking Congress and regulators to set rules for the industry for years, but this is Washington's first big step in that direction.
It'll be another six months until we hear what regulators recommend, but it could lay the groundwork for further innovations, including in the mining space.
An executive order to study cryptocurrency and digital assets has been coming for months, but this was the first concrete word we have gotten.
Investors generally saw it as supportive of the industry and that's why we saw cryptocurrencies rally by more than 10% early in trading Wednesday.
Despite the fact that we won't know what rules will be set for cryptocurrencies or their miners for months, if not years, I do see the U.S. as being increasingly supportive of the crypto industry.
Cities and states are trying to attract developers, and the federal government seems to be following suit. That's bullish for the industry long-term.
As bullish as I consider Wednesday's news, the impact here will be long-term in nature, so the immediate price surge may not last.
Cryptocurrencies continue to be volatile assets, and miners are reliant on both crypto prices for revenue as well as value since most hold significant quantities of tokens on their balance sheets. In short, be careful about assuming that this will drive crypto miners higher in the short term. This pop could fade quickly. Source: MSN