Bitcoin falls 6% as first hearing offers shared digital assets House Committee

The day of the first hearing of the Subcommittee on Digital Assets saw crypto markets down significantly, with Bitcoin falling to its 7-week low.

On one of the busiest days of one of the busiest weeks for crypto in the first quarter of 2023, the prices of Bitcoin, Ethereum and several cryptocurrency-related stocks fell between 6% and 10%. The day saw an opinion piece written by SEC Chairman Gary Gensler, comments on digital asset regulation made by the Fed’s Michael Barr, and, perhaps most impactfully, the first hearing of the Subcommittee on Digital Assets, Financial Technology and Inclusion.

Today’s price trends were a continuation, albeit in a more dramatic way, of trends seen since the start of the week. Most major digital assets, and cryptocurrency-related stocks, have traded slightly in the red for the better part of the week, which featured a selection of key positive and negative developments for the industry.

h2 Bitcoin hovers just above $20,000 as an active week draws to a close/t2

While Bitcoin has proved remarkably stable following the rally in January, its price took a decidedly downward trajectory on Thursday afternoon. In just a few hours, its value fell from over $21,500 to just over $20,300. A similar behavior could be observed with the world’s second largest cryptocurrency – Ethereum – which was also down around 6%.

Major digital asset-related stocks also saw a significant drop. MicroStrategy (NASDAQ:MSTR) fell more than 9%, Coinbase (NASDAQ:COIN) nearly 8%, and Grayscale Bitcoin Trust (OTC:GBTC) lost nearly 11% even though it won an important victory against the SEC just a few days earlier . The most dramatic drop, however, came from Silvergate (NYSE:SI), which lost 42% through today’s trading.

Silvergate’s latest halving is nevertheless not particularly surprising considering that the parent company revealed that it will wind down operations and close down the bank on Wednesday afternoon. Indeed, rather than being caused by the current decline in digital assets, Silvergate’s fall is a likely cause of the decidedly bearish sentiment seen in the cryptocurrency sector.

Despite the setbacks, the current week also saw several bargains for digital assets. Despite Grayscale’s successful day in court, a bankruptcy judge recently approved the acquisition agreement between Binance.US and Voyager Digital, despite regulatory opposition. Furthermore, the biggest creditor of the long-collapsed Mt. Gox that it would not sell the Bitcoin it is set to receive, easing some concerns about the future price of the cryptocurrency.

h2 Fed Wants More Control Over Stablecoins, Gensler Doubles Down on SEC’s Approach/t2

This Thursday also featured the speech by the Federal Reserve’s Michael Barr at the Peterson Institute for International Economics. Barr explained that he sees the Fed’s mandate on digital assets as clear and expressed a great need for strong guardrails that provide just enough leeway to facilitate innovation. While he took time to praise the opportunities that blockchain brings, Barr was somewhat more skeptical about the value of cryptocurrencies themselves. In addition, he reiterated Chairman Powell’s position that stablecoins fall firmly within the Fed’s jurisdiction.

Get the news you want

Read exciting news in the market with a personal feed of stocks you care about.

Get the app

Later in the day, SEC Chairman Gary Gensler shared his opinion on digital assets and the commission’s recent actions regarding the sector. In his text, Gensler once again claimed that the law, when it comes to cryptocurrencies, is very clear. Furthermore, he stated that he finds the argument that there is no clarity for companies from the industry unconvincing.

Gensler also wrote that it often appears as though cryptocurrency companies are trying to get the SEC’s approval without making the effort to actually become compliant. He added that despite the claims of several firms, not many digital assets are willing to talk to his agency. He also highlighted the fact that the commission had already brought more than 100 cases against the companies in the industry, and later Thursday, Lee Reiners, one of the witnesses at today’s congressional hearing, pointed out that the SEC won all of them.

h2 The Hawks and the Doves of the Digital Assets Subcommittee/t2

Thursday, March 9 may also yet prove to be a historic day for digital assets in the United States as it featured the first hearing of the Subcommittee on Digital Assets, Financial Technology and Inclusion. While the day failed to offer a clear path forward, it showed that the subcommittee is staffed in equal measure with digital asset advocates and cryptocurrency critics.

The topics at the hearing were varied, ranging from the question of whether digital assets should predominantly be classified as securities or commodities to the possible terrorist threat if the cryptocurrency industry is forced to continue its development outside the United States. The views expressed by the members, as well as by the witnesses, were likewise varied. Some, like Congressman Emmer – known as a staunch defender of digital assets – stated that the current crackdown on the sector is part of the Biden administration’s plan to curtail economic freedom and lead America down a more authoritarian path.

Others, like Congressman Sherman, were highly critical of cryptocurrencies, stating that their very name already positions them as “hidden” money that can only appeal to “bad actors”. Representative Lynch also rejected the idea that FTX, with all the fraud it committed, was just “a bad apple” and singled out the entire industry as rotten.

A major concern for the digital asset that was advocated, both among the members and the witnesses, was that the United States is seriously lagging behind other developed economies when it comes to cryptocurrency regulation. The concern is that the United States is in danger of losing its crucial position in the global economy due to its inability to manage digital assets properly and in a timely manner.

Congresswoman Houchin, one of the spokespersons from the subcommittee, went so far as to say that the race to facilitate the proper development of digital assets is the space race of our time.

Disclaimer: This Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

Written by:
The tokenist