Yesterday, the world’s best-known cryptocurrency experienced a tumultuous pullback. Bitcoin shed a good 10% to touch an intraday low at $11,163. It’s only been two weeks since we witnessed bitcoin hitting an 18-month high above $13,000. However, these kinds of boom-and-bust periods are not completely new to the cryptocurrency space but today’s drop was a big blow.
Fundstrat’s Tom Lee was quick to give some insight on what might have caused the parabolic drop and reminding us that bitcoin remains bullish in the long run.
“Important to step back and focus on the bigger picture and long-term frames on #bitcoin
-painful $2k drop in past day, partially due to federalreserve Powell comments @facebook #Libra
– drop invisible on weekly timeframe
Crypto winter over”
Albeit correlation is definitely not causation, analysts have attributed bitcoin’s drop to Fed’s Chairman, Jerome Powell criticism of Facebook’s Libra. Jerome called for a halt on Libra development until ‘serious concerns’ are addressed. He said, “Libra raises serious concerns regarding privacy, money laundering, consumer protection, and financial stability.” What followed after this announcement was a swift correction downwards.
Analysts have been bullish on Libra based on the fact that it could certainly pave the way for massive adoption of cryptocurrencies. When it was unveiled on June 18th, bitcoin experienced an upsurge of up to 75% in the following days, even nudging $14,000.
On Wednesday 10th, Jerome Powell testified at a hearing before the House of Representatives Financial Services Committee and criticized Facebook’s Libra. What ensued was a dip in the price of bitcoin. Some analysts believe that this drop was caused by Jerome’s comments about Libra. Some of these people include Fundstrat’s Tom who pointed out the correlation in his aforementioned tweet.