Bitcoin’s price rose defiantly in the wake of recent criticism this morning, climbing US$1,000 (AU$1,420), a gain of nearly 11 percent, in just over half an hour.
This much looked for rebound back above the $10,000 mark comes after several days of the cryptocurrency trading predominantly in the red.
Following an initial gain during yesterday’s Congressional hearing in Washington, DC regarding Facebook’s Libra cryptocurrency, Bitcoin was trading between $9,600 and $9,990 before dropping sharply this morning.
After falling to a low of $9,293.90 just after 10:00 AM EST, the price of Bitcoin catapulted to $10,293.08 in just 35 minutes and continued to climb, gaining an additional $424 over the next hour and a half.
The price of BTC had been steadily going up over the last few months, which many took as a sign that the long and dreaded “crypto winter” was ending.
Bitcoin hit $13,685 back on June 26th, up from $5,424 at the end of April; a remarkable gain of more than 152 percent in less than two months.
However, the ensuing weeks have not been kind to Bitcoin as prices fell from $13,083 on July 10th to $9,213 on July 17th.
The drop was accompanied by the usual panic from those unused to the volatility of cryptocurrency, but long-term crypto advocates such as John McAfee and Peter Brandt pointed out that BTC has suffered worse pullbacks in the past and then rebounded.
Capitol Hill gangs up on crypto
Bitcoin and other cryptocurrencies have taken a beating in the United States recently, with politicians including U.S. Treasury Secretary Steven Mnuchin, congressional leaders, and even President Donald Trump himself weighing in.
Last week, President Trump tweeted that he was “not a fan” of Bitcoin and other cryptocurrencies and that their value was “based on thin air.”
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Sec. Mnuchin parroted the president’s views at a press conference on Monday, adding that “cryptocurrencies such as Bitcoin have been exploited to support billions of dollars of illicit activity, like cybercrime, tax evasion, extortion, ransomware, illicit drug, and human trafficking.”
“This is indeed a national security issue,” he warned.
Surprisingly, the price of Bitcoin remained relatively unaffected by the president’s comments and it actually went UP following Mnuchin’s remarks.
Both the Senate Banking Committee and the House Financial Services Committee held hearings this week to address concerns over Libra, Facebook’s controversial cryptocurrency project.
Though the committees’ ire was directed primarily at Facebook and Libra, it did bleed over into the general crypto market.
During the Senate hearing, Bitcoin prices dropped by more than 10%, falling from $10,611 to $9,504 and continuing to fall into the following day.
However, during yesterday’s House hearing, BTC actually rose in price, climbing from a low of $9,135 to a high of $9,983.
So what caused Bitcoin’s price jump?
Nothing definitive is pointing to Bitcoin’s sudden $1,000 price jump, but there are several theories being tossed about.
One is that a lot of the trepidation and fear that grabbed hold of many investors in the lead-up to the congressional hearings is disappearing as they are realizing that the criticism and animosity are being directed primarily at Facebook and Libra, and not cryptocurrency as a whole.
Another theory is that the emergence of some high profile Bitcoin champions in the past 48 hours has helped buoy prices.
Yesterday, Rep. Patrick McHenry (R-NC), Republican Leader of the House Financial Services Committee, told CNBC’s Squawk Box in no uncertain terms that “you can’t kill Bitcoin.”
He doubled down on his bullish statement just a few hours later, when he remarked during the committee hearing that “the world that Satoshi Nakamoto, author of the Bitcoin whitepaper, envisioned—and others are building – is an unstoppable force.”
“We should not attempt to deter this innovation, and governments cannot stop this innovation. And those that have tried have already failed,” he added.
And just this morning, Squawk Box’s Joe Kernen called out Sec. Mnuchin over his comments about Bitcoin and other cryptocurrencies being predominantly used for “nefarious” purposes.
“Maybe it’s a little easier at this point in the technology for certain illicit activities but that can’t be the reason to say you’re not going to use them,” Kernan admitted before refuting Mnuchin’s claims.
“You wouldn’t even use cash then [because] cash is laundered all the time and used for nefarious… that’s all we’ve ever used for nefarious activities – and we’ve certainly had plenty of them.”
Despite Mnuchin’s insistence that the allegations of cash’s storied use in money laundering were inaccurate, Kernan pressed on:
There have been a lot of nefarious activities historically and [they have] never involved Bitcoin so obviously, it’s been pretty successfully done with cash.