Cryptocurrency prices continued their multi-day decline Thursday morning as investors weighed recent comments on efforts to regulate the industry. Here’s how some of the most famous assets traded on the Noon EDT:
All three assets are still up more than 50% in the last month, so holders shouldn’t be concerned that they are giving back some of those gains. What could be cause for concern are the perceived attitudes of government leaders towards cryptocurrencies. Regulation could play a major role in shaping the future of this asset class.
Negative comments have come from across the financial establishment. Earlier this month, the new chairman of the Securities and Exchange Commission called for more investor protection and compared the crypto market to the Wild West. Treasury Secretary Janet Yellen, the former chairman of the Federal Reserve, was more moderate in her public statements. While she has labeled Bitcoin a highly speculative asset, she has also recognized the potential benefits of crypto, such as safer, cheaper, and faster transactions.
A more concrete threat could be the infrastructure bill going through Congress. The bipartisan legislation could include a measure that would oblige many cryptocurrency developers to report information about the users of their tokens. The design of cryptocurrencies makes this practically impossible.
By this point, the investor community has gotten used to the volatility of digital assets. Two data points can indicate that the current sell-off will be short-lived.
Chainalysis – a company that collects data on blockchain and cryptocurrency usage – has indicated that those with digital wallets with more than $ 50 million have been net buyers of Bitcoin since late June. Another report from Blockchain.com shows that hashrate – all of the combined computing power used to process transactions and mine coins – is rapidly recovering after China’s recent crackdown on crypto mining. Headlines have often driven token price movements in the short term. Investors should expect this to stay that way.
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