The old adage “buy the rumor, sell the news” has been in full effect over the past 36 hours, and few assets have been rocked as hard as Bitcoin.
The largest cryptocurrency by market cap is currently trading at around $39,220, effectively the same price as at the beginning of the week. Still, this current price represents a nearly 7% drop over the past day.
When a leaked press release from Janet Yellen, the U.S. Secretary of the Treasury, outlined an approach to regulating the industry which promoted “responsible innovation," the leading cryptocurrency jumped nearly 8% Wednesday morning.
It appeared the market had expected something much graver, an expectation not unfounded either. Current regulators ranging from the SEC chairman Gary Gensler to Yellen herself have often slammed crypto for its role in illicit finance and for shirking consumer protection laws.
The now-deleted release, however, cast a much different light on the industry.
“This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses,” wrote Yellen.
Just after these sentiments were enshrined in a freshly signed executive order from President Joe Biden, however, Bitcoin has since shed almost all its gains.
Next to Bitcoin’s volatility, traditional stocks adjacent to crypto enjoyed a smooth ride higher on the heels of Biden’s executive order.
Volatility strikes Bitcoin, not crypto stocks
Firms like PayPal, Coinbase, Robinhood, and various stocks representing firms with exposure to crypto have all jumped over the past day.
Coinbase (COIN), the leading cryptocurrency exchange in the United States, is up nearly 11% since market close yesterday. PayPal (PYPL) is also up more than 5% and Robinhood (HOOD), one of the starlets of last year’s everything rally, has risen the same amount.
Companies with large Bitcoin holdings on their balance sheet, like MicroStrategy (MSTR) and Tesla (TSLA), are riding high too. MicroStrategy is up 6.43%, while Tesla jumped 4.19%.
From this perspective, it would appear that more traditional market players see these stocks as being far more valuable than the crypto assets they facilitate.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.