Bitcoin Holds Steady As SEC Rule Reversal, Trump’s Crypto Policies Counter Japan Rate Hike: Retail Turns Bullish

Bitcoin (BTC) held steady on Friday after the U.S. Securities and Exchange Commission (SEC) repealed an accounting rule that previously forced banks to classify the cryptocurrency and other digital assets as liabilities on their balance sheets, lifting retail sentiment.

The rescinded rule, introduced in 2022 as Staff Accounting Bulletin 121 (SAB 121), imposed strict capital requirements on digital asset holdings. 

The guidance was a major deterrent to Wall Street banks owning Bitcoin.

The regulation had made it financially and operationally challenging for Wall Street banks to offer crypto custody services. Its removal signals the reduction of regulatory burdens, potentially fostering wider institutional adoption of cryptocurrencies, driving bullish retail sentiment.

This comes after the Bank of Japan (BOJ) lifted the benchmark borrowing cost to the highest in 17 years to 0.5% from 0.25%, while raising inflation forecasts.

"If the outlook presented in the January Outlook Report will be realized, the Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation," the policy statement said, according to ForexLive.

Its anticipated impact was countered by President Donald Trump's announcement of an executive order banning the development of a digital dollar while promoting cryptocurrency and artificial intelligence innovation.

In comparison, the BOJ’s July rate hike had previously rattled risk assets, including cryptocurrencies.

The executive order also created a cryptocurrency working group tasked with proposing regulatory frameworks and exploring the establishment of a "national digital asset stockpile."

This resilience in risk assets suggests that market attention is increasingly centered on potential policy developments under Donald Trump's presidency. 

Bitcoin Sentiment and Message Volume on Jan.24 as of 10:45 a.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment around the apex cryptocurrency flipped to ‘bullish’ from ‘bearish’ a day ago. 

Message volume also increased to ‘high’ from ‘normal’ levels as retail investors praised the SEC's decision and Trump’s executive order as pivotal for crypto innovation.

Some users speculated that Bitcoin could hit a new all-time high if it breaks through the $106,000 resistance level. 

However, a breakout attempt on Friday was rejected, leaving BTC 2.9% below its previous peak of $109,000, achieved ahead of Trump's inauguration.

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