Crypto market resilient amid stock market volatility

The U.S. stock market faced another tough week. Although stock prices fell for most of the week, the crypto market held up well. After bottoming out on Monday, we saw a slight recovery throughout the rest of the week. Also in this edition of Market News: The proposed U.S. bill aimed at facilitating the purchase of 1 million BTC.

Market update

On the US stock market, the mood was gloomy again last week. The S&P 500 and tech-heavy Nasdaq both continued to fall, reaching their lowest point on Thursday: a 14% correction for the Nasdaq and 10% for the S&P 500. For the crypto market, these may not seem remarkable percentages, however they represent a significant blow for an index featuring the largest US companies.

In comparison, the crypto market held up relatively well. The price of Bitcoin briefly fell below €72,000 on Monday, but bounced back to around €76,000 on Tuesday. Altcoins followed a similar pattern.

The chart below shows Bitcoin's price over the past 15 months, with the top right showing the 3 months when prices ranged between €87,000 and €106,000. This pattern could be described in several ways, such as a double top or rectangle top, however the price target is generally the same: around € 71,000. 

We've now reached that point, and in doing so, Bitcoin also touched the 50-week average, which has been a key dividing line between bull and bear markets in recent years. If this correction deepens, €67,500 would be the next logical target as this would test the upper end of the price range where Bitcoin moved sideways for eight months last year.

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Is the US buying 1 million BTC?

Politics is the art of trying again. Last year, US Senator Cynthia Lummis introduced a bill that raised eyebrows around the world: a proposal to build a strategic Bitcoin reserve, similar to the US strategic oil reserve or the gold stored at Fort Knox.

The proposal didn't pass. The timing was poor, the resistance was strong, and it looked like a niche idea backed by a small interest group. But what do politicians do? They don't discard the proposal - no, they reintroduce it.

This week, that's exactly what happened. Lummis resubmitted her proposal, this time with Congressman Nick Begich as co-sponsor. As a result, it's now on the agenda in both the Senate and the House of Representatives. That's crucial, because in America, every bill must pass through one of these chambers before being approved by both. Without support from both sides, a proposal will go no further than a committee chair's desk.

This time however, the circumstances are radically different from a year ago. Now, Trump is back in the White House, and in January, he signed an executive order calling for the creation of a national Bitcoin reserve. This proposal is not just a long shot, it's a logical follow-up to current White House policy.

Without the use of taxpayer money

What exactly does the bill propose? Over the course of five years, the U.S. government must secure one million Bitcoin in a vault. According to Lummis and Begich, this would be done without using taxpayer money. The funding would instead come from existing resources: central bank profits, gold revaluations, and accounting adjustments. The two politicians are keen to emphasize fiscal responsibility: no additional debt, no new taxes.

Reintroducing a bill does not mean it will become law overnight. It's just the first step in a long process of committees, hearings, amendments, votes, and ultimately, a signature from the president. But the fact that it's being presented in both chambers, with Trump's support, at a time when sentiment around Bitcoin is tipping globally? That's significant.

Others are taking advantage of this development too. Take Byron Donalds, a Florida representative in the House, who announced in late February his bid for the governor’s seat. One of his key proposals? The creation of a state-level Bitcoin reserve.

In any case, the proposal is now firmly on the political and public agenda. This makes Lummis's renewed attempt far more promising than her initial effort. In politics, patience often determines who comes out on top.

In other news

• U.S. Congress rejects controversial "DeFi broker rule". This rule would have required developers of so-called non-custodial software (such as wallets and protocols that allow users to manage their own crypto) to identify their users: an unenforceable requirement that drew much opposition. With 292 votes in favor in the House and 70 in the Senate, the measure is now off the table. Even in Washington, lawmakers now understand that you can't make open-source software sign a KYC form. And that's a win for DeFi.

• The SEC delays decisions on a range of new crypto ETFs. This includes ETFs for XRP, Solana, Litecoin, and Dogecoin, as well as regulations around Ethereum staking ETFs and in-kind creation for Bitcoin and Ether funds. There's no surprise here, since no new chair has yet been appointed to replace Gary Gensler. For now, it's a waiting game until the next round of developments.

• Strategy plans to raise another $21 billion through the issuance of preferred shares. The proceeds are officially earmarked for "general purposes," but with 499,096 Bitcoin already on the company's balance sheet, the intention is clear. This new at-the-market program is separate from the previously announced 21/21 plan, in which Strategy aims to issue $21 billion in shares and $21 billion in debt securities to purchase even more Bitcoin.

• US banking regulator OCC approves broader crypto activities. National banks may now store crypto, hold stablecoin reserves, and participate in blockchain networks without prior approval. The OCC has removed previous restrictions and will now treat crypto activities the same as traditional banking; provided proper risk management is in place. This lowers the barrier for banks to engage with crypto.

Satoshi Radio: The latest episode of Satoshi Radio discusses the historic moment of the creation of a strategic bitcoin reserve in the United States. What does it mean and what exactly does the related executive order say that Trump signed? The hosts also take you through the latest news and explain why the crypto market is caught between hope and fear.

This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it.

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