Fed’s Jerome Powell’s Comments Brings Down Bitcoin Rate
Bitcoin suffered a 12% decline after stocks markets rose due to Fed Chairman Jerome Powell's comments. In the case of bitcoin, CNBC reported that Powell echoed "serious concerns" about the cryptocurrency, especially Facebook's plans about their own digital offering, the crypto coin Libra. The bitcoin exchange as it happened dropped down to about $11,450.
Just two weeks ago, bitcoin was posting a 17-month high just above $13,000. It opened up early in the year modestly, but it has pleasantly rebounded to around 200% since the start of the year, keeping its momentum while companies like Facebook and Fidelity started to get involved heavily in propagating and exploring the many benefits of bitcoin.
Powell, however, began sharing his "serious concerns" about the planned digital currency of social media giant Facebook. The social media company is planning to launch the token, with a consortium of companies including Uber and Visa backing the effort. Powell shared his concerns to no less than a congressional committee, where he said that Libra raised issues regarding money laundering and consumer protection, among others.
The fall of bitcoin shows just how volatile it can be, which is no surprise to some of its most ardent supporters. Its critics might point out that it is heavily dependent on real-world situations, such as the announcement of Facebook's Libra. Forbes reported how it declined to as little as $12,138 from $13,175, and extending these losses further to a $12,062.47 trading value.
Analysts pointed to "profit taking" as the reason behind the largest fluctuations lately. The market has risen a lot, according to CEO of CryptoCompare Charles Hayter, and is currently having people jumping in to take profits while the value is manageable. However, as a highly volatile investment asset, investors are largely risking big to win big.
The $13,000 mark has been especially hard to maintain, mused John Todaro, director of digital currency research at Tradeblock. He observed how the crypto-coin declined every time it managed to hit that mark. It descended into volatility and displayed declines such as the one that's happening currently.
Facebook's Libra might change that, as it explained that it is a "stablecoin"-a cryptocurrency backed by a rigid value, similar to the dollar. In Libra's case, the token is backed up by a group of different fiat currencies from different governments, as well as debt securities.
The general conclusion is that the market wasn't ready to reach "fresh highs" just yet. However, those who have been trading and observing bitcoin for a long time will only see it as a normal occurrence in a cycle.