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Bitcoin and shares in crypto companies surged on Wednesday amid a broad “relief rally” in risky assets and after US President Donald Trump’s latest rallying cry for the digital assets industry in its fight with Wall Street banks.
Bitcoin, which has plunged almost 50 per cent since peaking at around $125,000 in early October, climbed 8 per cent to as much as $73,777, its highest level in a month. The gains came as US stocks and other risk assets rose, after tumbling this week on fears of a prolonged hit to energy markets from the war in Iran.
“It’s a broad rally today, and bitcoin was more beaten down than equities,” said Alex Thorn, head of research at Galaxy Digital. “It’s a relief rally.”
Coinbase shares jumped 15 per cent, Robinhood added 8 per cent and Gemini gained 34 per cent on Wednesday. Exchange Bullish also rallied 11 per cent while stablecoin issuer Circle’s stock rose 6 per cent. Michael Saylor’s Strategy gained 10 per cent and Mike Novogratz’s Galaxy leaped 18 per cent.
“Crypto equities are outperforming today on the back of Bitcoin’s sharp recovery,” said Jasper De Maere, desk strategist at crypto exchange Wintermute. Hedge funds have been running large bets against Strategy, Coinbase and Robinhood, according to Goldman Sachs data.
Trump wrote on his social media platform Truth Social late on Tuesday that: “The Genius Act is being threatened and undermined by the banks, and that is unacceptable — we are not going to allow it,” in a reference to a landmark law overseeing the stablecoin industry that was passed last year.
The crypto industry is locked in a bitter disagreement with traditional lenders over the act, with banks seeking to change a measure that allows crypto companies such as exchanges Coinbase and Kraken to pay interest to customers who hold stablecoins on their venues.
Banks are lobbying hard to overturn this, warning it risks deposits fleeing from traditional lenders into crypto, which could have wider implications for the financial system. They say allowing crypto exchanges to pay interest means they are essentially acting like banks, and that this poses risks to the wider financial system.
Crypto companies argue that killing “rewards” on stablecoins is an anti-competitive measure. Stablecoins are a type of cryptocurrency pegged 1-to-1 to sovereign currencies such as the dollar.
A planned Senate committee review, known as a mark-up, in January was pulled after Coinbase withdrew its support, underscoring the crypto industry’s growing clout in Washington.
In his Truth Social post, Trump said banks “need to make a good deal with the crypto industry because that’s what’s in [the] best interest of the American people.” Trump’s sons also run a crypto company called World Liberty Financial, which issues its own stablecoin.
“Thank you Mr. President,” Coinbase’s chief policy officer, Faryar Shirzad, wrote on X.
Wednesday’s moves also came after Mike Selig, Trump’s appointment as chair of the Commodity Futures Trading Commission, the main US derivatives regulator, threw his support behind crypto perpetual futures — popular products that allow traders to place leveraged bets on the future price of digital tokens.
“The Biden administration drove crypto asset firms and liquidity offshore, including the perpetual futures markets,” Selig said on X late on Tuesday. “We’ve got to bring perpetual futures back to the US and are working towards getting them here soon.”