Cryptocurrency market stabilized on Sunday, stopping the free fall from the last week. Bitcoin defended the key support of 10,500 USD and inched higher by 1.2% to 10,713 USD at 06:00 a.m. ET. The world’s largest cryptocurrency has seen significant volatility this week, with its price having dipped below 9,500 USD, the cryptocurrency is down around 3% over the past 7 days at press time.
Over the past week, multiple US government officials have expressed concerns regarding cryptocurrencies, including Bitcoin and Facebook’s Libra. Among those officials are Fed Chairman Jerome Powell, Secretary of Treasury Steven Mnuchin and President Donald Trump himself. The dominant narrative in the media is that these comments, which started July 10, are the cause of the about 30% decline in the value of Bitcoin.
However, the high-level comments on Bitcoin, even though negative, also bring legitimacy to the crypto and raises its profile.
This week’s comments on Bitcoin by government officials, while mostly negative, are in no way an indication that the US is planning any drastic steps involving actual cryptocurrencies, unlike Libra. Bitcoin is enjoying another 15 minutes of fame, courtesy of the US government.
Going forward, it is worth paying attention to any government association of Bitcoin with terrorist or national security since it negatively affects public opinion. But Bitcoin’s decentralized nature ensures there is no “Bitcoin CEO” to grill in Congress, unlike Libra. Bitcoin’s decentralization is one of its strengths as a store of value.
Lastly, it is worth noting that the majority of scepticism and antagonism this week were directed towards Facebook and Libra, not Bitcoin. Bitcoin occupied only a fragment of the screen time when Powell and Mnuchin explained their Libra concerns. While developments in the cryptocurrency regulation front do need to be followed carefully, there was nothing to take off some 30% of Bitcoin’s value.
During the weekend, the cryptocurrency edged higher and climbed slightly, recovering from the lows reached earlier.
Crypto markets recap
The cryptocurrency market is mostly into the green today. The total crypto market value rose to 293.026 billion USD and again attacks the 300 billion USD mark.
Ethereum has finally started the upsurge in the intraday movement. The second-largest cryptocurrency is up by 1.2% to 228.56 USD. The current coin movement is bound to bring good news for the intraday traders.
Ripple’s XRP rose by 1.8% to 0.3322 USD, while Litecoin added 1.7% to 100.58 USD.
Bitcoin Cash is one of the best-performing cryptocurrencies during the trading session, adding 5.7% to 329.51 USD. Meanwhile, Bitcoin SV gained 14% to 180.64 USD.
TRON, Cardano and Monero are also growing strongly, adding 5.8%, 3.1% and 2.1% respectively.
Libra vs Bitcoin
Facebook’s plans for creating own cryptocurrency, called Libra, was in the focus of the markets during the last weeks. The company is forced to defend its project because of regulatory problems around privacy and concerns that digital money can be used for illegal activity. At the same time, the G7 warns that Facebook’s cryptocurrency may create serious legal risks.
Libra, however, is undoubtedly compared to a Bitcoin, though many experts question whether Facebook’s currency can be called crypto at all. Here are the main differences between the two.
One of the biggest differences is in the basic technology behind the two currencies.
In the Bitcoin, transactions are recorded anonymously in the so-called blockchain. Essentially, this is a database supported by a network of computers where transactions are secured in such a way that virtually impossible external interference is possible.
Libra also uses a form of blockchain, which however needs to receive authorizations, which means that transactions can only be made by a group of trusted parties.
For this purpose was established a Libra Association, based in Switzerland, consisted of a consortium of companies that includes such companies as Visa and Uber. Each of the members of the association invests a minimum of 10 million USD in the project.
This model differs significantly from the Bitcoin network, which can be accessed and supported by anyone who has enough hardware and Internet access.
Another major difference is the purpose of usage. Bitcoin is referred to as a virtual currency for payment, which allows people to exchange money without using banks. It is currently used as a form of investment and is often called “digital gold”.
The main purpose of Libra is to use cross-border payments and remittances. The digital currency of the social network will be tied to a basket of official currencies and other assets to avoid volatile movements, often seen in crypto-lows such as Bitcoin and Ethereum.
Facebook’s cryptocurrency is definitely the focus of attention when it comes to regulations. And the key point is in financial intermediaries because, according to experts, the system without intermediaries, as in Bitcoin, is a system without intermediary risk and therefore there is no need for a regulation aimed at protecting against the risks that come from intermediaries.
The Libra Association currently consists of 28 members, hoping for them to reach 100 by the time of the currency, which is expected to happen in the first half of 2020.
This week, questions were raised as to how Libra would fit into existing financial regulations.