Today the first round of hearings that Facebook must undergo to clarify details about its Libra project has begun. Libra is a stablecoin designed to enable global value transfers. Although the announcement initially generated excitement, U.S. authorities are skeptical about allowing the project to proceed. Today Facebook appeared before the House Financial Services Committee of the United States. The tense situation has brought Libra, Bitcoin and the broader topic of cryptocurrencies into discussions at the highest levels, including remarks from President Donald Trump and multiple members of Congress. Many observers believe that the volatility seen in recent days is partly due to this political scrutiny. The market reaction has been mixed; we analyze the details below.
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The threat of Libra is pushing Congress toward BTC
At least that appears to be the stance of Kevin McCarthy, the House Minority Leader (formerly Majority Leader). In surprising comments during an interview with CNBC, McCarthy said his view toward Bitcoin has softened. Facebook’s entry into the digital currency space and its move into decentralized technologies has drawn intense regulatory scrutiny, especially given the company’s history of privacy issues. McCarthy expressed support for Bitcoin’s decentralized nature and security properties, while criticizing Facebook’s project:
“Blockchain provides a lot of security. What worries me is that the responses I’m hearing from Washington are really the same ones I heard during the passage of Dodd-Frank… When I’m on Facebook, I’m not the customer, I’m the product. Facebook is free because it sells your data to make money… I like Bitcoin and what I like when we talk about BTC is the blockchain, because of the security.”
These remarks are among the clearest from a senior politician so far. McCarthy argues Libra cannot be equated with Bitcoin because the Facebook token “is not decentralized.” He also described Libra’s structure as closer to a monopoly that could absorb competition. McCarthy added that the company has used the rhetoric of decentralization to persuade people they are part of a broader trend. He specifically mentioned payment companies involved in the project, such as Visa and Mastercard, saying they act as intermediaries that blockchain technology ultimately aims to remove.
“Examining Facebook’s proposed digital currency and its impact on consumers, investors, and the U.S. financial system”
That is the official title of the hearing. The session is taking place as this is written and is being broadcast on YouTube by the House Financial Services Committee. Legislators opened a heated discussion to press Facebook for more details about the cryptocurrency project. The hearing lasted more than two hours and was opened by Maxine Waters, who criticized Facebook’s past conduct. David Marcus led Facebook’s responses to lawmakers’ questions, repeatedly assuring that Libra will not launch until regulatory frameworks are resolved:
“I’m glad you asked that question. We will not proceed until we have addressed all concerns and established an appropriate regulatory framework here in the U.S.,” Marcus said in response to questions from Representative Warren Davidson.
Bitcoin loses the $10,000 support level but rebounds amid strong volatility
Bitcoin’s price fell below the important psychological support near $10,000, sliding more than 25% in a week. The broader altcoin market experienced a similar—often deeper—decline. Ethereum, for example, suffered a sharp drop: ether lost the $200 support level before finding a firmer floor around $190, a level referenced in our recent technical analysis of ETH.
After an agonizing day on Tuesday, cryptocurrencies began to rebound. Bitcoin rose more than 7% after touching lows near $9,050. Some market participants attribute the rebound to a relatively measured stance from U.S. authorities toward Bitcoin specifically; the regulatory pressure appeared aimed more at Facebook than at digital currencies or blockchain technology in general.
Despite the recovery, confirmation indicators—such as a strong daily close—will be necessary to calm the warning signs. Below is a graphical summary of current prices for major cryptocurrencies and their percentage changes over the last 24 hours: