Market Recap: Bitcoin Drops as White House Plans Crypto Regulation

US and Russia tackle crypto

Both equity and crypto markets continue to fall, with crypto taking a significant hit later in the day as reports surfaced that the White House was preparing an executive order to regulate cryptocurrency as a matter of national security.

The order would assign agencies to analyze the various forms of digital assets and create a framework for regulation, according to Barron's. The source said that the idea is to create a set of policies that are in line with the government's plan for the space.

“This is designed to look holistically at digital assets and develop a set of policies that give coherency to what the government is trying to do in this space,” said Barron's source.

While the US moves to finally regulate the crypto industry at some level, Putin has come out in support of a plan to tax and regulate bitcoin mining in the country, a stance that rejects the Bank of Russia's proposal for a full-scale ban of all crypto-related activities, according to Bloomberg.

Bitcoin climbed as much as 1.16% prior to this report but then proceeded to fall as much as almost 3.4%. The markets weren't kind to equities either, with the S&P 500 dropping sharply later in the day.

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Volatility in the equities market has continued to soar as investors prepare for looming interest rate hikes, creating a mostly trader and algorithm-heavy marketplace. The VIX, a measurement of volatility in options of the S&P 500, has increased to its highest level in a year.

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Top stories

Story: Risk-On Appetite Falters: Bitcoin Trades Like Big Tech

• As investors embrace a risk-off approach, bitcoin is trading more in sync with equities
• The correlation will fade and bitcoin will rise, though, analysts say

Story: Is Solana the Next Crypto Investment For Institutions?

• Open interest for SOL futures contracts grew more than 400% in the past six months — from roughly $150 million in August to nearly $800 million this month
• Solana serves as a “natural hedge” to owning Ethereum, according to Two Prime Co-Founder Alexander Blum

Story: New Metaverse ETF Hits US Market

• Subversive Capital wants metaverse industry to develop without getting “Zucked-up,” the firm's portfolio manager says
• Meta Platforms is the top holding in Roundhill Investments’ metaverse ETF, which has $822 million assets under management

Story: Facebook-led Crypto Project Diem to Be Sold Off for $200M: Report

• Silvergate Capital Corp. will reportedly pick up the tab for the Facebook-led Diem association’s off loading of its crypto tech
• Silvergate Capital is a holding company for its crypto-focused bank which provides financial infrastructure and services to digital asset participants.

Earnings season

Mastercard (MA) exceeded earnings expectations today when it reported before the markets opened that Q4 net revenues were up 28%. During the call, CEO Michael Miebach said, "We want to help increase Ethereum scalability via our ConsenSys partnership," but did not elaborate more on the topic.

Apple, Robinhood and Visa all release earnings after the markets close today.

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Tomorrow

Market participants are still uncertain as they await policy changes from the Federal Reserve. This uncertainty has led investors to seek non-correlated assets with the stock market and even cash, causing further drops. The volatility is likely to continue in the lead-up to Fed policy changes and continue as they take effect.

Upcoming earnings reports from crypto-adjacent companies to look out for include PayPal, MicroStrategy and Alphabet this coming Tuesday.

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