Facebook’s Libra has been knee-deep in criticism ever since it was unveiled. Another hurdle that Facebook is currently facing is testifying during US governmental hearings. David Marcus, the head of the Calibra wallet, will be testifying before the Senate Banking Committee and the House Financial Services Committee on Tuesday 16th and Wednesday 17th respectively.
Libra And Bitcoin Mutuality
Facebook’s digital asset, Libra has always been perceived by analysts to have a correlative price effect on bitcoin. Case in point, after Libra was unveiled on June 18th, bitcoin pumped from $9,000 to $13,800 within a week.
Also, on July 15th, 2019, Steven Mnuchin, US Treasury Secretary, made a surprise press conference and addressed the hot topic on cryptocurrency regulation. Mr. Mnuchin echoed President Trump’s comments on cryptocurrency use in illicit activities saying it’s a “national security issue”.
Some crypto analysts were speculating earlier that Trump could ban cryptocurrency but Steven basically stated that crypto-operating companies should adhere to all the set regulations and steer clear of money laundering schemes and terrorism funding.
These recent comments stirred up excitement in the cryptocurrency community with many believing that Steven’s comments are extremely bullish for bitcoin. Travis Kling, a popular crypto investor noted,
“The Chairman of the Fed and the Treasury Security both agree that bitcoin is a store of value. Both of them along with the President, agree that Libra and Bitcoin are two different things. Wildly bullish.”
During the press conference, bitcoin price noticeably surged above 10, 900, less than 24hours after bitcoin tested below $10,000 in a horrendous slump. Crypto enthusiasts fear that bitcoin could suffer a brutal sell-off if Libra receives a knockout blow from US Lawmakers. On the contrary, a green light for Libra during the hearings will mean a likely rally for bitcoin.
Historically, Bitcoin Price Fluctuates Following Congressional Hearings
In Feb 2018, bitcoin shed half its value from trading at $12,000 to $6,000 in the 10 days prior to the hearing before the Senate Banking Committee. The hearing had a favorable outcome on cryptocurrencies as bitcoin soared back to levels above $11,700.
In another instance last year, bitcoin plunged from $6,820 to $6,070 days before the House Committee on Financial Services convened for an official gathering to discuss the extent to which the US government could consider crypto as money and the potential uses of cryptocurrencies. After the hearing, its price spiked to $7,400.
Bitcoin Rally Or Dip?
Notice a trend? Bitcoin has plunged days following scrutiny by regulators and days later, prices have surged. In this case, Facebook’s Libra is set to face scrutiny and as aforementioned, bitcoin prices react to monumental events in the Libra ecosystem.
At press time, bitcoin is up by 6.40% and is trading at $10,737. If previous trends are anything to go by, bitcoin price will likely rally further in the wake of positive news after Libra’s imminent hearings and vice versa.