Increasing Regulatory Scrutiny May Be Driving Latest Bitcoin Downtrend
Bitcoin (BTC) has been caught in a firm downtrend ever since it set a yearly high at $13,800, with the cryptocurrency continually facing significant downwards pressure that has forced it to drop to fresh multi-month lows of just above $7,000 over the past 24-hours.
Analysts are now noting that increasing regulatory scrutiny surrounding Bitcoin and the aggregated crypto markets – some of which has essentially been spillover from that surrounding Facebook’s Libra – may be one impetus behind BTC’s recent bearishness.
Bitcoin Plummets Towards $7,000 as Downtrend Remains Firm
At the time of writing, Bitcoin is trading down nearly 1% at its current price of $7,530, which marks a slight recover from its recent lows of $7,400 that were set at the bottom of yesterday’s drop.
It is important to note that analysts do believe that Bitcoin may be positioned for further losses in the near-term, which may be driven by increasing scrutiny from regulators and politicians within the United States.
Jeff Dorman, the chief investment officer at Arca, explained while speaking to CNBC that a lack of positive catalysts coupled with increasing regulatory scrutiny may be the main forces driving the recent downtrend.
“Today’s selloff is a continuation of the themes that have been plaguing crypto for the past few months — increased regulatory scrutiny,” he explained, while also referencing the “lack of positive catalysts” and Bitcoin’s low trading volume.
US Congress Looks Closer at Crypto Amidst Libra Controversy
Facebook’s digital currency initiative – Libra – appears to have drawn a noteworthy amount of attention on Bitcoin and the aggregated crypto markets alike, with bi-partisan members of congress holding a Libra-focused hearing, lauding criticism on crypto in general.
“Cryptocurrency either doesn’t work, in which case investors lose a lot of money, or it does achieve its objectives, and displaces the U.S. dollar as the sole reserve currency in the world… You’re going to be making powerful burglary tools and letting your business partners commit the burglary,” Representative Brad Sherman, D-Calif., said during yesterday’s hearing.
Prospective BTC buyers may be fearful to invest in Bitcoin or any other cryptocurrencies at the present, as it does appear that fresh regulations surrounding the nascent markets may be imminent in the near-future.