The total cryptocurrency market capitalization has dipped about 2% this week after hitting $1.86 trillion earlier this month.
Fundamental analysis: Powell comments weighing on crypto?
Jerome Powell said this week that cryptocurrencies still represent an unstable store of value and that the Federal Reserve is in no rush to roll out a competitor.
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“They’re highly volatile and therefore not really useful stores of value and they’re not backed by anything,” Powell commented during a virtual panel discussion on digital banking held by the Bank for International Settlements.
“It’s more a speculative asset that’s essentially a substitute for gold rather than for the dollar.”
Powell’s comments come just a few weeks after Bitcoin hit its new all-time high of more than $60,000 as the cryptocurrency continues to win mainstream acceptance in the financial sector. The Fed has been working on its own payment system in the past couple of years that allows faster money transfers. The bank is expected to launch the final product over the following two years.
Moreover, the bank has been investigating whether launching a central bank digital currency (CBDC) would be a necessary or a practical solution.
“To move forward on this, we would need buy-in from Congress, from the administration, from broad elements of the public, and we haven’t really begun the job of that public engagement,” Powel said, adding that moving on with CBDC plans requires great care and transparency.
However, Powell admitted that the coronavirus pandemic has highlighted the importance of designing better payment systems.
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Technical analysis: LTC rebounds, a double top in ADA?
Litecoin (LTC) price has rebounded around 5% today after it fell over 20% in the past two weeks. This dip has pushed the price action below the triangle support, with this ascending trend line now acting as resistance just above the $200 handle.
Lower, the 100-DMA at $164 offers a buying opportunity in Litecoin in case the pullback extends.
Cardano (ADA) price has failed to break above the $1.48 handle for the second consecutive time. This failure has resulted in a rotation lower as sellers look to push the price action towards support near $1.00.
This level is also a neckline in the double-top reversal chart pattern, whose break will activate the bearish setup with the measured target at $0.49. Alternatively, crypto traders buying ADA will defend the $1.00 handle and push for the third test of the $1.49 resistance line.
Summary
The Fed chair Jerome Powell said that cryptocurrencies are still an unstable store of value and that the central bank will move carefully before rolling out its own digital currency.