Bitcoin tops $42,000 amid expectations of Biden executive order Image Credit: Gulf News

Bitcoin, the world's largest cryptocurrency, rose above $42,000 amid a sharp rally in digital tokens on Wednesday as the industry awaits further detail on a US executive order.

The coin advanced as much as 9.9 per cent to $42,305. Ether gained 7.4 per cent. Investors are awaiting an update on a possible executive order from President Joe Biden this week, which is expected to outline the US government's strategy for cryptocurrencies.

In a since-removed statement dated March 9 posted to the US Department of the Treasury website, Treasury Secretary Janet Yellen said the approach outlined in the order "will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses."

"For years, the crypto market has been hindered by a lack of regulatory clarity in the US," said Hayden Hughes, chief executive officer of trading social-media platform Alpha Impact, in a message Wednesday. "If clear guidelines are passed, this could be a watershed moment for the industry."

Bitcoin has swung within a range of $33,000 to $48,000 for much of the year. The latest move higher came despite the somber tone in wider markets due to the war in Ukraine and turmoil in commodities.

Privacy coins Monero and Zcash gained around 27 per cent and 20 per cent respectively in the past 24 hours, CoinGecko data showed, amid speculation that they may get payment traffic displaced by the sanctions on Russia.

"The recent surge in privacy coins is mostly driven by traders speculating on the possibility that we will see capital flight" into them, said Ben Caselin, head of research and strategy at crypto exchange AAX, in a message Wednesday.

While privacy coins allow for a higher degree of anonymity, the networks they live on are less decentralized and less secure than Bitcoin, and limited in market cap, he said. "Rather than a new trend, current uptake is likely to be limited, with more volatility ahead."