Crypto Sends Sell Signal as Congress’ Facebook Fixation Grows
While U.S. lawmakers zero in on Facebook Inc.’s ambitious plan to
upend the global financial system via its cryptocurrency project,
technical indicators are flashing major warning signals when it comes to
the price of digital assets.
Based
on the GTI VERA convergence-divergence indicator, the Bloomberg Galaxy
Crypto Index -- which tracks some of the largest digital assets and is
comprised 30% of Bitcoin -- received its first sell signal since early
June. The indicator detects positive and negative trends, and the last
time it flashed a warning sign on June 4, the index fell about 10% in
one trading session.
It’s been a volatile month for crypto assets. Prices surged in June
after Facebook announced plans to launch its own digital coin called
Libra, which the company hopes will one day trade much like the dollar.
The launch added to optimism that digital assets are becoming more
widely adopted by mainstream institutions. Bitcoin gained more than 40%
last month.
But Libra’s success is far from guaranteed. It’s drawn the ire of policy makers who have raised privacy and regulatory concerns. House Democrats wrote
to Facebook’s top brass earlier this month requesting that the social
media giant stop developments on Libra until regulators and Congress
have an opportunity to scrutinize it more closely.
Libra again took center stage on Thursday during Federal
Reserve Chairman Jerome Powell’s second day of testimony on the economy
to Congress. The initial question from Mike Crapo, the Republican
senator from Idaho who leads the Senate Banking Committee, was about
Facebook’s plan for a digital currency.
In response to questions
Wednesday from Maxine Waters, a Democrat from California and the
chairwoman of the House Financial Services Committee, Powell said that
“Libra raises many serious concerns regarding privacy, money laundering,
consumer protection and financial stability.”
Prices of most cryptocurrencies were down for a second day.
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