Yesterday we might have spoken too soon about the bullish effects of US Treasury Secretary Steve Mnuchin’s and US President Donald Trump’s comments on Bitcoin.
Immediately following their comments, the price of Bitcoin went up and it even got close to the 70% level of Bitcoin dominance. Brian Armstrong, CEO of Coinbase, previously tweeted that these tweets and comments reflected an “unlocked achievement” for the industry, and was a sign of good things to come. He isn’t necessarily wrong, but in the short-term, Bitcoin has dropped below $10k in a heavy dump.
Facebook’s Effect on the Industry
It seems as if the massive Bitcoin dump that has occurred in the last 24 hours is partly because of the comments made about Bitcoin, but also because of a 2nd hearing taking place regarding Facebook’s Libra Project.
Many have attributed the recent rise in Bitcoin’s price to the unveiling of the Libra project, so as the tech giant stablecoin receives more pushback, this jump would naturally get reversed.
A follow-up hearing will occur today as U.S. Congress investigates the possible effects of nearly 3 billion people having their finances controlled by a tech giant that has already proven untrustworthy with user data. They are in the midst of a stakeholder analysis on how consumers, investors, the government, the financial system, and other parties would be affected.
Concerns About the Government
The worry is that regulators will forget how different Bitcoin and other decentralized coins are from projects like Libra, and regulate them all equally. Yes, Libra has brought more legitimacy to the market and attracted market inflows, but they are fundamentally different, and should be regulated as such.
Refreshingly, U.S. House Representative Kevin McCarthy seems to agree:
“When I’m on Facebook, I’m not the customer, I’m the product. Facebook is free because they sell your data to make money. Now they want to get into the business, and they’re not Bitcoin, in this Libra. They’re not decentralized. I want to see decentralization because Libra concerns me that they’re going to control the market.”
What This Means For Bitcoin’s Price
Bitcoin has dumped nearly 15% in the last 24 hours and is now hovering around the $9,300 mark, as shown in the chart below.
Dropping below $10k is a mental barrier that many worry will lead to a further retracement as the trend reverses. Lower lows will bring the price down for at least the short-term before BTC finds a good bounce. Analysts are predicting moves down to anywhere between $6k and $8k as a result of this lack of support.
On the plus side, average daily transaction value on the Bitcoin market has continued to rise in the last few weeks. This means more users are both buying Bitcoin and selling Bitcoin as trading intensifies. Since breaking $3 billion on July 11, it has maintained this level, even with the price drops. This increase in interest represents a more than tripling of the previous levels shown 3 months ago. None of the altcoins have shown the same uptick in volume, and recent losses for ETH, LTC and BNB show that even though they may not participate in the upside, they still get the downside of changing crypto market sentiments.