Bitcoin has dropped to a five-month low of $7,435 USD following Facebook CEO Mark Zuckerberg’s testimony before Congress in defense of the planned stablecoin Libra.
The world’s largest cryptocurrency fell as much as 9% to its lowest levels since June, as Zuckerberg was grilled by congressional representatives before a sitting of the House Financial Services Committee. Bitcoin has been caught in a range of $8,500 to $7,850 since the end of September; however, analysts were expecting a bullish end to today’s decline as technical charts showed signs of seller exhaustion. This did not come to fruition, however, as a large, long squeeze led to long holders loosening their position.
Today’s drop in value for Bitcoin comes at a time when regulatory scrutiny drags down crypto values across the board. Jeff Dorman, Chief Investment Officer at Arca, described the sell-off as “a continuation of the themes that have been plaguing crypto for the past few months — increased regulatory scrutiny.” He added that the losses were further compounded by “a lack of positive catalysts” along with low trading volumes.
However, Zuckerberg’s appearance in Congress may not be the only factor hurting Bitcoin today. Brian Kelly, CEO of BCKM, believes that hedge funds were buying up BTC as a hedge to Brexit, which was due to take place on October 31, but it now appears that a delay until the new year is the likely outcome. As a result, those funds are now offloading BTC, which is having negative price implications, according to Kelly.
Facebook’s move into cryptocurrencies has put digital coins in the spotlight of regulators across the globe. Former Latvian Prime Minister and incumbent Vice President of the European Commission Valdis Dombrovskis said the EU must take a common approach to regulate cryptocurrencies, an approach that will have Libra and Bitcoin at its forefront. He said that it is vital that these regulations address issues such as unfair competition, security, and threats to the economic stability and sovereignty of the EU’s member states.
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