Facebook’s head of Calibra – one of the entities set up to govern and develop the crypto project – David Marcus is scheduled testify to lawmakers on the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.
The upcoming scrutiny of Libra may be weighing over bitcoin. After all, past data shows BTC tends to drop ahead of congressional hearings related to cryptocurrencies and rise on favorable outcomes.
Bitcoin has come under pressure ahead of the U.S. governmental hearings on Facebook’s Libra cryptocurrency on July 16 and 17.
The price of a single bitcoin, which stood near $13,000 five days ago, fell below $10,000 earlier today and tested the 50-day moving average at $9,900 for the first time since February 18.
Last year, for instance, BTC fell from $6,820 to $6,070 in five days to July 12, before rallying to $7,400 on July 18 when the House Committee on Financial Services gathered for a hearing on “crypto as a new form of money”.
More importantly, the cryptocurrency remained bid in the following days and rose to a high of $8,500 on July 24 (according to Bitstamp data) because the hearing didn’t take an overly negative tone.
On similar lines, BTC dropped from $12,000 to $6,000 in the 10 days leading up to a congressional hearing on Feb. 6, 2018, where the Securities Exchange Commission (SEC) chairman and the head of the Commodity Futures Trading Commission testified before the Senate Banking Committee. That hearing was also surprisingly positive and BTC rose back to levels above $11,700 by Feb. 20.
Going further back, the price action seen ahead of bitcoin’s first congressional hearing on Nov. 18, 2013, was slightly different in the sense that the cryptocurrency was solidly bid, rising from $85 to $650 in six weeks leading up to the event.
Again the hearing on the growing popularity of virtual currencies wasn’t anti-crypto, allowing BTC to extend the rally to highs above $1,150 on Nov. 30.
Facebook’s fiat and government bond backed cryptocurrency Libra is widely considered a net positive for bitcoin, an anti-establishment asset.
This is evident from the fact that BTC rallied from $9,000 to $13,800 in the eight days following Facebook’s unveiling of Libra’s white paper on June 18.
So, it is hardly surprising that the leading cryptocurrency is feeling the pull of gravity ahead of the congressional hearings on Libra and will likely take a hit if the U.S. lawmakers throw a spanner in the works for Facebook.
It is worth noting that the likes of the Federal Reserve President Jerome Powell have already called for a halt to Facebook’s project until concerns from privacy to money laundering are addressed. President Trump also criticized the project in tweets last week.
BTC, however, may rise well past $13,800 and possibly hit record highs before the end of the third quarter if the hearings are more optimistic.
A far as the technical charts are concerned, the short-term outlook will remain bullish as long as prices hold above $9,614 (July 2 low).
As of writing, BTC is changing hands at $10,300 on Bitstamp, representing 4.86 percent drop on a 24-hour basis.