Bitcoin (BTC) was lower, although it stayed in its range for the past six days, between roughly $ 30,000 and $ 33,000.
Cryptocurrency traders and analysts planned to keep an eye on an expected announcement by the Federal Reserve on Wednesday at 2 p.m. in Washington (7:00 p.m. UTC) and to explain the Federal Reserve’s latest monetary policy plans as the coronavirus continues to devastate the economy. At a scheduled press conference thereafter, Chairman Jerome Powell is likely to ask questions about the Fed’s $ 120 billion monthly bond purchases – a focus for Bitcoin traders, who are betting that continued money pressures will eventually lead to inflation could.
“Bitcoin seems poised to consolidate a little more, but if the Fed isn’t cautious enough and the dollar recovers, the $ 30,000 level could easily break,” said Edward Moya, senior market analyst in New York at in London-based foreign exchange broker Oanda said in comments sent by email.
(NOTE: CoinDesk’s Nathan DiCamillo spoke to top economists like Ken Rogoff and Claudia Sahm about this week’s Fed meeting. While no major announcements are expected on Wednesday, Fed Chairman Jerome Powell and his central bank colleagues will soon have to meet take care of it The thorny question of how to prevent inflation from spiraling out of control once the economy reopens. Full story: How Bitcoiners Should Follow Wednesday’s Federal Reserve Meeting.)
in the traditional marketsEuropean stocks fell and US stock futures indicated a lower open. Gold weakened 0.4% to $ 1,843 an ounce.
Why not spend a little bit of time trading bitcoin in a row to discuss the potential market risks associated with Tether (USDT), the largest dollar-pegged stablecoin? As Daniel Cawrey of CoinDesk reports, many cryptocurrency traders and industry executives would prefer to ignore the topic altogether, even though it has become more important than ever in some ways.
Tether has become a major source of liquidity for cryptocurrency traders in recent years as the tokens can be easily moved in blockchain-based digital markets.
However, there have been doubts about the stablecoin for a number of years, mainly due to the lack of full checks on the reserves for the tokens. In 2018, in a peer-reviewed research report, two scientists wrote that the tether coinage may have helped inflate the bitcoin market during the 2017 bull run.
So one question is what could happen to Bitcoin prices if inappropriate revelations emerge over the leash. Several ongoing investigations, including by the U.S. Department of Justice (DOJ) and the New York attorney general, have followed the stablecoin firm, as Cawrey has elaborated.
What makes this a more pressing concern now is the recent rapid growth in the industry, which may add to the risks: the amount of cable outstanding increased roughly fivefold over the past year to about $ 25 billion.
Stuart Hoegner, General Counsel of Tether, told CoinDesk, “We are working with regulators and law enforcement agencies around the world to support their investigations and help them understand our business.”
For their part, authorities have tightened regulation of cryptocurrencies as the industry’s market cap surged above $ 1 trillion for the first time. In the US, the Office of the Currency Auditor announced earlier this month that federally regulated banks can use stable coins for payments and other services. British officials released a paper asking for comment on the use of stablecoins in finance.
Kevin Lehtiniitty, chief strategy officer of Prime Trust, a Nevada-based trust company that has worked extensively with stablecoins, told Cawrey he thinks officials could plan a framework for stablecoins backed by the regulated banking system – to stamp out potential systemic problems Risks. Right now, most cryptocurrency traders are likely just ignoring these risks.
“What is the probability that it will crash in the next few hours that I’m holding?” Lehtiniitty said. And that’s the stupidest excuse in the world. But I keep hearing it from OTC and trading partners, other people, and it drives me crazy. “
Read more: Questions about tether just don’t go away. Is the crypto market interested?
Bitcoin is locked in the $ 30,000 to $ 35,000 range for the fifth year in a row, which is a sign of caution ahead of the Federal Reserve meeting that could make financial markets more volatile.
The Fed is expected to keep rates unchanged near zero and keep its liquidity-enhancing bond purchase plan at around $ 120 billion / month. The status quo decision is unlikely to provoke a reaction from Bitcoin and the markets in general.
However, if Fed chair Powell drops evidence of an early taper (gradual unwind) in stimulus programs, stocks could fall and the safe haven dollar would likely pull bids and push Bitcoin down.
“BTC could come under selling pressure if Powell signals an early taper,” Darius Sit, co-founder and managing partner of Singapore-based QCP Capital, told CoinDesk.
The Fed has made it clear since August that it wants to keep interest rates low for some time even after inflation has risen above 2%. According to Yohay Elam of FXStreet, Powell, could indirectly signal willingness to buy more bonds by demanding higher household spending. In this case, liquidity would shine like Bitcoin and Gold. President Joe Biden is pushing for a $ 1.9 trillion stimulus package, and the government may have to rely on the Fed for at least some of the additional funding. like Elam.
Read more: Bitcoin falls, dollar bounces ahead of Federal Reserve rate announcement
What is hot?
The exit of Bitmain co-founder Jihan Wu resolves the power struggle that has lasted for years as the mining company prepared for the IPO (CoinDesk).
Genesis Capital’s active outstanding loans increase 81% to $ 3.8 billion in Q4 2020 (CoinDesk) (Editor’s note: Genesis is a unit of Digital currency group, the owner of CoinDesk)
Social networks are turning to blockchain technology as centralized tech giants like Facebook, Google, and Twitter have concerns about power (NYT)
Bitcoin is an incredibly dirty business with a carbon footprint comparable to that of New Zealand (Bloomberg opinion)
Bitcoin locked in DeFi logs tops 40,000, potentially showing traders turning into altcoins for juicier opportunities (CoinDesk).
According to ARK’s Cathie Wood, approval of the Bitcoin ETF is unlikely until its market capitalization increases to around $ 2 billion (CoinDesk).
Ethereum’s hard fork is not really a hard fork in the traditional sense (CoinDesk’s Valid Points Newsletter)
Former CEO of Goldman Sachs, Lloyd Blankfein, said in an interview about Bitcoin: “If I were a regulator, I would hyperventilate about the success at the moment and prepare myself to deal with it” (CNBC via Twitter)
The DeFi trading platform dYdX receives a $ 10 million financing round from investors including Three Arrows, DeFiance Capital, Andreesen Horowitz, Polychain Capital and Coinbase co-founder Fred Ehrsam (CoinDesk).
Colombia, Estonia upload Bitcoin whitepaper to their government websites (CoinDesk)
“Price bubbles accelerate the growth of the Bitcoin user base, the expectation of which then fuels the price bubble,” writes the marketing professor at the University of Southern California in op-ed (CoinDesk Opinion).
Thomas Friedman writes that printing money to service US national debt “could endanger the dollar’s status as the world’s reserve currency”NYT opinion)
The latest on economics and traditional finance
China’s asset bubble warning – and $ 12 billion dragged out of the financial system by open market operations on Tuesday – threatens Hong Kong’s equity frenzy (Bloomberg)
Blank check companies talk about Reddit and TikTok when private investors put money into SPACs (Bloomberg Business Week)
The renewed demand for Treasuries removes fears of rising interest rates (WSJ)
Amid the crisis in the aviation industry, the world’s largest jet leasing companies issued $ 15 billion in bonds this month with yields of 2% to 3%, up from around 5% last summer (WSJ)
Consumer confidence in the US improves economic outlook more than expected (Bloomberg)
The IMF estimates that nearly 90 million people are likely to fall below the extreme poverty line in 2020-21, with the pandemic wiping out projected production by $ 22 million by 2025 (Reuters)
Wall Street shrugs at Washington’s debt jam (Politico)