FED has not changed its approach regarding cryptocurrencies
Today, Federal Reserve Chair Jerome Powell spoke about the cryptocurrency market:
เริ่มเทรดทันทีวันนี้ หรือ ลองใช้บัญชีทดลองแบบไร้ความเสี่ยง
เปิดบัญชี ลองบัญชีเดโม่ ดาวน์โหลดแอปมือถือ ดาวน์โหลดแอปมือถือ-
The speech still did not contain any specifics about the regulation of the industry;
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Powell said the FED has long decided to support 'responsible innovation';
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According to Powell, potentially some innovative solutions will bring long-term effects, but some of them will become hype. It seems that Fed chair referred to several thousand cryptocurrency projects, not all of which will pass the "test of time";
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Powell pointed to the so far unknown risks that may affect the financial system.
Earlier this month, Powell approached the Treasury Department to investigate how the cryptocurrency market could affect US national security and financial stability. Some senators have recently indicated that digital currencies may be used by Russian oligarchs to bypass sanctions.
The head of the Fed also mentioned the investment risk and the lack of government protection in relation to digital assets. However, it is worth bearing in mind that the stock market is also characterized by enormous volatility, and it's also hard to say what exactly Powell meant when he referred to government protection. In the past, similar warnings came from financial institutions and governments around the world. However, this did not prevent the market from growing, and blockchain technology is still gaining popularity among large institutions.
The FED has declared that it will try to determine how cryptocurrencies may affect extraordinary market situations such as crashes or recession. Powell also expressed concern about the so-called 'Stablecoins' which mainly mimic the exchange rate of the US dollar. Central bank is concerned that these digital currencies are not fully backed by the physical dollar.
Summing up, Powell's speech may have negatively surprised some investors who expected positive news from the Fed. At the same time, the ban on cryptocurrencies was not mentioned. The Fed clearly views 'innovation' positively. This term has many meanings, such as the blockchain technology itself, smart contracts and perhaps some cryptocurrency projects that have recently been gaining attention from institutions.
The price of Bitcoin did not fall after Powell's speech, which could indicate a potential outflow of short-term investors who could lead to a panic sell-off. However, a further downward move still cannot be ruled out.
Bitcoin, D1 interval. The cryptocurrency price has been moving in a downward trend since the beginning of November 2021, reaching the low on January 24, 2022. Since then, the price has been trying to recover. Recently, Bitcoin tested support at $41,450, which coincides with 23.6% Fibonacci retracement. As long as price sits above this level, a further upward move may be on the cards. Next major resistance is located at psychological levels of $45,000. Currently, the 'king of cryptocurrencies' is testing the upper limit of the triangle formation. Source: xStation5
