Lawmakers push for updates on Fed review of central bank currencies and stablecoins
While the focus of Powell’s testimony was largely on tackling inflation and monetary policy, digital assets were also discussed.
Lawmakers have raised questions about why the Federal Reserve has not yet released its review of central bank digital currencies (CBDC) and stablecoins. While Powell stated that the Fed will release the review in the coming weeks, Senator Brown spoke about the risks of cryptocurrencies to the US economy. Senator Brown is the chair of the US Senate Committee on Banking, Housing, and Urban Affairs.
Senator Brown has shared his views on cryptocurrency before. Last month, the senator was less impressed during a hearing of the Stablecoins Committee. The latest negative comments came on the heels of news that wired a US congressional subcommittee preparing for a hearing on the environmental impact of crypto mining.
Bitcoin (BTC) Price Action
In response to Fed Chair Powell’s comments, bitcoin surged 2.35% in the next hour, reversing its 1.11% drop to a day low of $41,279. It is worth noting that Bitcoin fell 2.7% in response to the minutes of the Federal Open Market Committee meeting last week.
On Tuesday, Bitcoin ended the day 2.18% higher at $42,743. Despite the gains, bitcoin has remained down 7.48% since the beginning of the year.
Elsewhere, Binance Coin (BNB) stock is up 9.11%, with Ethereum (ETH) and Litecoin (LTC) ending the day with gains of 5.10% and 4.07%, respectively.
for the next day
The focus now turns to the US inflation figures for December. While Fed Chair Powell’s comments were market-friendly, another rise in US inflation could force the Fed on a bolder path toward normalization. This will be a passive crypto market.
As for Bitcoin, a fall back below $40,000 would once again test support. Another recovery in inflationary pressure is likely to send bitcoin back through Monday’s low of $39,668 before buying opportunities appear themselves. However, a move to $43,000 levels would bring in $45,000 levels and support a shift in market sentiment.
At the time of writing, Bitcoin (BTC) is up 0.34% to $42,887.