Bitcoin Moves Near Key Resistance Again After Trump Signs Pro-Crypto Executive Order

Most cryptocurrencies are performing positively as well during this same period, with their combined market cap surging by 3.8% to $3.64 trillion.

Notably, smart contract networks like Ethereum (ETH) and Solana (SOL) are experiencing higher gains of 4.9% and 8.4% respectively as Trump and his top artificial intelligence and crypto advisor, David Zacks, are working to foster a better environment for blockchain companies to thrive.

Among the most relevant provisions included in the EO, Trump is creating a Working Group on Digital Asset Markets that has been tasked to submit a report to the President within the next 180 days where they “recommend regulatory and legislative proposals” that help the administration achieve its goals in the field of digital financial technology.

His priorities for the sector include legalizing mining activities and the access and use of blockchain networks within the country. In addition, the administration would like to promote the development of cryptocurrencies to strengthen the dollar’s dominance.

Meanwhile, the order requires the termination of any plan or initiative to launch a U.S. central bank digital currency (CBDC) as they are considered a threat to the country’s financial system and citizens’ privacy.

These supportive measures are fostering the beginning of a new era for the crypto industry in the United States considering the hostile stance that the Biden administration adopted toward the sector in the past four years.

Bitcoin Could Face Correction if It Fails to Clear This Area of Resistance

The latest price action has repeatedly pushed Bitcoin near a key resistance area between $106,000 and $108,000. The next few days will be critical to determine if yesterday’s news was already priced in depending on what BTC does.

Rumors that Trump was going to approve a pro-crypto EO right after he entered the Oval Office have been circulating for weeks. Hence, if the market had already accounted for this positive move, the price could retreat as part of a typical “sell the news” moment.

A rejection of the $108K level could confirm this scenario and would result in a double-top pattern for BTC that could push it back to the low $100,000s in the near term.

Meanwhile, a break above its recent all-time high may mark the beginning of a new bullish cycle, especially if the administration takes more concrete actions to help the sector – possibly on the legislative front.

The MACD is still in positive territory and momentum is favoring a positive short-term outlook. However, the rally could be entering a fragile stage now that most of the market’s short-term expectations about Trump have been fulfilled.

Crypto Committee Will Discuss the Merits of Setting Up a “Digital Asset Stockpile”

In addition, the Working Group will further discuss the benefits and risks of setting up a “digital asset stockpile” that would be funded initially with the digital assets that various law enforcement agencies have seized in the past few years.

According to data from Arkham Intelligence, the U.S. government reportedly holds $21.3 billion worth of digital assets including over 198,000 BTC and 54,000 ETH.

On January 9, a court of law denied a motion that prevented the U.S. Marshals Service from selling 69,370 Bitcoins linked to the Silk Road case.

Although the court did not expressly order the agency to sell the assets, they typically conduct auctions to sell seized properties.

The sale of these assets may now be put on pause until the President’s recently appointed committee evaluates the merits of setting up a strategic reserve for digital assets in the next six months.