2021-03-23 11:48:31

Bitcoin slumps after Fed chief warns of cryptocurrency risks

Bitcoin price slumped 6% on Tuesday to near the $53,000 level after US Federal Reserve Chairman Jerome Powell said people must realize the risks of investing in the world’s oldest crypto asset and other digital tokens.

According to an Associated Press report, Powell said the Fed prefers to call crypto coins “crypto assets,” because their volatility undermines their ability to store value, a basic function of a currency. “They’re highly volatile, see Bitcoin, and therefore not really useful as a store of value,” Powell said in remarks to a virtual summit hosted by the Bank for International Settlements.

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“They’re more of an asset for speculation. So, they’re also not particularly in use as a means of payment. It’s essentially a substitute for gold rather than for the dollar,” Associated Press reported Powell as saying.

During the past 24 hours, prices of the world’s oldest cryptocurrency, bitcoin, hit a low and a high of $53,285.84 and $58,235.91, respectively, as per CoinGecko. The digital asset was trading at $54,716.14, down 5.5%, at around 4.55pm IST.

Meanwhile, the world’s second-biggest cryptocurrency, ethereum, was trading 6% lower at $1,694.92. With the latest fall, the digital token has slumped 17% further away from its lifetime high of $2,042.93.

“While the opening and closing prices of most of the major cryptocurrencies last week were more or less equal, there was an in-between price swing on both sides. A sudden decline in prices in the early last week was strong enough to hint that it could be a price correction, but it recovered within the next two days. In other words, it means the correction may not happen in the present price range yet and it may be due after the market hit higher price ranges,” said Sathvik Vishwanath, co-founder and CEO Unocoin.

Meanwhile, Twitter CEO Jack Dorsey has sold a digital version of his first tweet for over $2.9 million, more than two weeks after he announced a digital auction for the post.

“The new segment of tokens related to NFTs (non-fungible tokens) is making enormous noise which has created a significant FOMO in spite of the traders seeing this to be the value identification phase. There have been numerous pictures and voice clips, which got sold and bought over the NFT supporting platforms on the blockchain. This not only helps the NFT tokens to identify their own value but even the actual tokens representing the artworks are getting evaluated through auctions as well. From the way this part of the industry is growing, it is likely that the NFT will create the same buzz as the DeFi created about a year ago,” Vishwanath added.

(Do you have a personal finance query? Send in your queries at mintmoney@livemint.com and get them answered by industry experts.)

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