Bitcoin Falls Below $30,000 Following Yellen's Warning

"Sharp Drop After 'Used for Illegal Finance' Remark... Ethereum Also Falls"

[Asia Economy New York=Correspondent Baek Jong-min] The prices of virtual assets such as Bitcoin plummeted following warnings from Janet Yellen, the nominee for U.S. Treasury Secretary and former chair of the Federal Reserve (Fed) (photo).

[Image source=AP Yonhap News]

On the 21st (local time), according to virtual asset exchange Coindesk, most virtual assets including Bitcoin and Ethereum showed a decline rate close to 10% that day. The price of Bitcoin dropped to $29,327 at 8:29 a.m. in Hong Kong. It had surpassed $30,000 for the first time ever on January 2 but returned to the starting point within 20 days. Ethereum also plunged to $1,200 just two days after reaching an all-time high of $1,439 on the 19th.

CNBC reported that the total market value of all virtual assets was $910 billion as of 11:45 a.m. that day, down 10% or $100 billion over 48 hours.

The sharp decline in virtual asset values was triggered by Yellen’s remarks during the Senate confirmation hearing on the 19th, when she responded to a lawmaker’s question about the risks of expanding virtual asset use by stating that "virtual assets are being used for illicit finance." She added, “The government may also consider ways to reduce the use of virtual assets in criminal activities including terrorism and to prevent money laundering.”

At the hearing, Yellen emphasized economic stimulus through increased U.S. government debt. While fiscal policy using expanded government debt could be a factor driving Bitcoin prices, her mention of possible U.S. government regulation dampened enthusiasm for Bitcoin investment.

Coindesk also reported that Yellen’s remarks raised concerns that the Joe Biden administration would impose regulations on virtual assets, pulling down prices. Guy Hirsch, director at eToro, predicted, "The Biden administration is expected to focus more on financial consumer protection compared to the Donald Trump administration. If regulators take an aggressive stance, Bitcoin prices could show a long-term bearish trend."