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The United States Federal Reserve has finally taken special attention to the rising crypto assets’ prices in its assessment of the financial system stability in general. It went on to say that such a surge represents an increase in the risks investors are taking.
This observation was included in the Fed’s Monetary Policy Report to the U.S. Congress as the semi-annual review was released on Friday, July 9. With that in mind, it’s pretty much evident by now that lawmakers are now turning their heads to finally take a look at what is described by Fortune as “a tiny sliver of the financial system.” One might argue that the Fed had tackled the topic of cryptocurrency before. It has to be pointed out, though, that the institution has rarely (if ever) utilized the asset class as some sort of standard in considering the wider market condition.
Part of the report stated that there are parts of the financial system that have grown to become more susceptible to potential instability since its last account to Congress in February. Its core system, however, remained strong.
Further, it was also put to note that the “surge in the prices of a variety of crypto assets also reflects in part increased risk appetite.” The Fed even issued a warning about the general level of asset prices. The central bank stated that these (asset prices) may be vulnerable to significant declines should investor appetite fall, unexpected surges in interest rates, or even recovery stall.
Fed meetings regarding crypto
Fed Chairman Jerome Powell, on the other hand, noted on his monthly diary that he met up with Coinbase Global Inc CEO Brian Armstrong on May 11. The following day, Powell then met with Christopher Giancarlo who’s one of the well-known cryptocurrency advocates out there.
The meeting between the Coinbase bigwig and Powell was said to have lasted at least 30 minutes. It was also learned that former U.S. House of Representative Speaker Paul Ryan was on the same meeting as this took place during a time where cryptocurrency prices were very much volatile. When asked as to what was discussed during the said meeting, both spokespersons for the Fed and Coinbase declined to disclose such information.
Powell had mentioned previously, however, that he wants the Fed to have a “leading role” in devising international standards for digital currency. The institution is said to have been planning a “discussion paper” that is scheduled to be rolled out this summer. Its contents are said to contain topics highlighting both benefits and risks of digital payments.
Bitcoin, Ethereum, and Dogecoin going bearish
Albeit the fact that it’s still struggling to regain its previous glory, Bitcoin’s (BTC) price is up to some 250 percent as compared to how much the cryptocurrency was about a year ago. On Thursday, the granddaddy of tokens was down by six percent as its price is still hovering over the $30,000 mark when the stock market closed on that day.
Both Ethereum (ETH-USD) and the meme token of Dogecoin (DOGE) also took a similar blow as both of them fell about 10 percent. It is said that these price dives come after a period of relative stability for cryptocurrency markets.
The probable reason for such an event is likely to be similar to the sell-off in both the United States and global markets. Additionally, investors have grown wary of inflation including the sluggish economic bounce back from the ongoing global health crisis.
As of writing, the price of Bitcoin sits at $33,000. Still on the $30K zone.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
