Bitcoin, ethereum and other major cryptocurrencies are stuck in a doom loop despite payments giant Visa dropping a crypto bombshell this week (while Binance’s CEO has issued a hack warning).
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The bitcoin price has dropped back to where it was before BlackRock’s
BLK landmark spot bitcoin exchange-traded fund (ETF) filing, with some warning of a bitcoin and ethereum “death cross,” even as a Securities and Exchange Commission (SEC) insider revealed a shock prediction.
Now, a top Federal Reserve official, Michael Barr, has warned he’s “deeply concerned” about the $120 billion stablecoin market that’s exploded over the last few years—which is closely linked to the price of bitcoin, ethereum and other major cryptocurrencies.
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“If non-federally regulated stablecoins were to become a widespread means of payment and store of value, they could pose significant risks to financial stability, monetary policy and the U.S. payments system,” Barr, Fed’s vice chair for supervision, said at during a fintech conference at the Federal Reserve Bank of Philadelphia, adding he’s “deeply concerned” about stablecoins such a tether and Circle’s USDC
USDC that operate without strong federal oversight.
The stablecoin market has ballooned to around $120 billion over the last few years, with tether and USDC, each with close links to the bitcoin, ethereum and crypto market, growing to dominate the space.
U.S. lawmakers are scrambling to pass regulation governing stablecoins and keep up with regions in Europe and Asia, with Democrats and Republicans in the House financial services committee battling over how much autonomy state regulators should have.
“It is important to get the legislative and regulatory framework right before significant risks emerge,” Barr said. “We appreciate the work Congress has been doing on this important issue and look forward to further engagement to ensure that there is a robust federal framework for all stablecoins.”
In June, Federal Reserve chair called for strong Fed oversight in stablecoin regulation during testimony before the House financial services committee, saying: “We believe it would be appropriate to have quite a robust federal role.”
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Meanwhile, the price of bitcoin, ethereum and major cryptocurrencies are struggling in a prolonged “bearish trend” that’s already sapped all of the bitcoin price’s summer gains.
BTC has been pegged at $26,000 for more than two weeks,” Alex Kuptsikevich, senior market analyst at FxPro, wrote in an emailed note this week. “An attempt to move back above the 200-day average has technically encountered stronger selling, confirming that the bears are not relinquishing market control. This disposition suggests higher risks that the consolidation will end with downside momentum, potentially at $25,000 or even $24,000.”
“On ethereum’s daily timeframes, a ‘death cross’ has formed, with the 50-day moving average falling below the 200-day moving average,” Kuptsikevich added. “Such a signal suggests a further decline, emphasizing the bearish trend here. On the bitcoin chart, [a death cross] could form next week. But we also note that ethereum already looks locally oversold.”