On Tuesday, Bitcoin returned to above $7,000 for the first time since June 8, and rushed to the $7,500 mark along the way, driving the market capitalization of digital currencies to rise almost entirely. But a number of authorities, including Fed Chairman Powell, poured a cold water on the digital currency market such as Bitcoin on Wednesday. According to Bitstamp's offer, Bitcoin fell below $7,400 before midday trading, and broke the $7,600 mark after midday, then fell below $7,500.
The founder of Citadel expressed a strong dislike of Bitcoin and advised young people not to invest in Bitcoin. Because in his view, digital currency can't compete with the French dollar and other legal currency. For example, people must hold the US dollar to file tax at the end of the year. There is no other choice, so no digital currency is needed. The birth of digital currency is like a solution that was invented before the problem. He also suggested that young people should invest in companies that can define the future of the country or industry, hoping that they will promote capital to create jobs, promote innovation and ultimately develop the economy.
Wall Street has mentioned that Fed Chairman Powell attended the semi-annual hearing of the US House of Representatives Financial Services Committee on Wednesday. He believes that digital currency has no endogenous value, is not a currency, and lacks investor protection. Prior to this, he said that the market value of digital currency is not large enough to threaten the stability of the US financial system, but in the long run, digital currency or similar assets will affect the economy. At the hearing on Wednesday, Powell reiterated this view and said that the Fed did not consider issuing official digital currency. He believes that digital currency is generally not used as a means of payment, and high volatility is not a value storage function, so it is not a currency. As an investment tool, digital currency poses a huge risk to investors, and there are problems of investor and consumer protection. There are widespread regulatory issues in the digital currency field and they are used for illegal purposes such as money laundering, tax avoidance or terrorist financing.
At the same time, Powell also believes that the Fed does not have the power to supervise the digital currency. On the issue of encrypting digital currency, the protection of investors belongs to the jurisdiction of the US Securities and Exchange Commission. The G7 central bank also often discusses the issue of strengthening investor education and protection. However, in the appointment hearing last year, he believed that Bitcoin's underlying technology blockchain may have significant application prospects in the wholesale payment field.
There is also a US Congress hearing on July 18th called "The Future of Money: Digital Currency", which considers cryptocurrencies that may be implemented domestically and globally. At the hearing, the subcommittee discussed the issue of central banks deploying cryptocurrencies and their underlying technology blockchains, arguing whether the central bank should introduce the central bank's digital currency. For this, senior researchers at the R Street Institute believe that having a central bank's digital currency is one of the worst financial ideas in recent years, but it is still completely imaginable. He believes that the central bank's digital currency will only increase the size, role and power of the bank, and the Fed's adoption of CBDC will make it an overwhelming credit distributor in the US economic and financial system. He also said that he can safely predict that its credit allocation will inevitably be highly politicized, and taxpayers will be in trouble due to their credit losses. The risk will exist directly in the central bank.