'Pigeon' Yellen Was a 'Hawk' on Cryptocurrency... Bitcoin Price Plummets

Calling for Economic Stimulus Through Debt Expansion While Hinting at Bitcoin Regulation
Cryptocurrency Prices Like Bitcoin and Ethereum Plummet
Market Capitalization Drops by About 10%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The runaway cryptocurrency has been put on hold. The protagonist is Janet Yellen, the nominee for Treasury Secretary and former chair of the U.S. Federal Reserve (Fed). When she hinted at the possibility of U.S. government regulation on Bitcoin, cryptocurrency investment sentiment sharply contracted.

CNBC reported on the 21st (local time) that $100 billion, equivalent to 10% of the cryptocurrency market capitalization, disappeared within two days. According to CNBC, the total market value of all cryptocurrencies was $910 billion as of 11:45 a.m. that day, down $100 billion over 48 hours.

According to CoinDesk, Bitcoin traded at $41,000 on the 8th but was priced in the $31,900 range as of that day. Bitcoin’s price fell below $32,000 for the first time since the 11th.

Ethereum also plunged to $1,200 within two days after reaching an all-time high of $1,439 on the 19th.

Most cryptocurrencies, including Bitcoin and Ethereum, showed a decline rate close to 10% that day. The downward trend became clear after the 19th.

[Image source=Reuters Yonhap News]

BlackRock, the world’s largest asset management firm, listed Bitcoin futures as eligible for investment trading with the U.S. Securities and Exchange Commission (SEC), but the decline could not be stopped.

It is also presumed that institutional investors and 'Bitcoin whales' increased their short positions in the Bitcoin futures market, which contributed to the price decline, but the market consensus is that the decisive factor was Yellen’s remarks.

At her confirmation hearing on the 19th, when asked by a lawmaker about the risks of expanding cryptocurrency use, Yellen mentioned that "cryptocurrency is being used for illegal finance." She also said the government could consider measures to reduce the use of cryptocurrency in criminal activities, including terrorism, and to prevent money laundering.

While Yellen emphasized economic stimulus through expanding U.S. government debt, she showed a negative stance toward Bitcoin. Fiscal policy using expanded government debt could be a factor driving Bitcoin prices, but instead, it encountered a headwind in the form of potential government regulation.

Cryptocurrency exchange CoinDesk reported that Yellen’s remarks raised concerns that the Biden administration would impose regulations on cryptocurrencies, pulling down prices.

Guy Hirsch, U.S. director at eToro, explained, "The Biden administration is expected to focus more on financial consumer protection compared to the Trump administration. If regulators take an aggressive stance, Bitcoin prices could show a long-term bearish trend."

It is reported that President Biden has nominated Rohit Chopra, a Federal Trade Commission commissioner and close aide to progressive Senator Elizabeth Warren, as director of the Consumer Financial Protection Bureau (CFPB). This is widely expected to change the status of the CFPB, which had weakened under the Trump administration. If policies to strengthen financial consumer protection are enhanced, it cannot be ruled out that Bitcoin could be negatively affected as well.