After having the best one-month rally in May since the token’s monumental jump in 2017, bitcoin again came under pressure. In the past five days (as of Jul 17, 2019), the cryptocurrency lost about 17.7%, while it is up 153.5% this year.
What Led to The Recent Plunge?
Bitcoin fell below $10,000 after the U.S. lawmakers interrogated Facebook (FB) on its cryptocurrency plans, especially on privacy- and trust-related issues. Traders said the reason for selling was not immediately clear, but severe political and regulatory scrutiny of digital coins probably led to a downslide in shares. Even President Doland Trump seems to be against the project, as he said Facebook’s digital currency “will have little standing or dependability.”
The social media giant is striving to get Washington’s support on its crypto plan. In fact, Facebook startled the investing world, regulators and lawmakers on Jun 18 with its announcement of launching its own digital coin called Libra in 2020, per Reuters.
It is now being believed that Facebook will have a tough time to get Senate’s approval. “During the hearing, a U.S. senator said Facebook was “delusional” to believe people will trust it with their money,” was quoted on Reuters. Facebook’s announcement contributed to a meaningful crypto rally in late June when bitcoin prices touched the $13,800-mark.
Such pressure from regulators is not new to bitcoin. The SEC hasn’t said yes to any ETF launch proposal on bitcoins so far. SEC is worried about its extreme price volatility in cryptocurrencies and liquidity in bitcoin-related funds. Per Reuters, the virtual currency can be deployed to quickly move money anywhere in the world without any central authority’s intervention, such as a bank or government. The market is pretty unregulated at the current level (read: Yet Another SEC Disapproval for Bitcoin ETF: What Next?).
Several central banks issued warnings against it. A number of global central banks are worried that Facebook’s proposed Libra’s entrance could weaken their sovereign currencies.
What Lies Ahead?
Though Facebook’s crypto plans could be tossed aside by regulators, the sheer discussion about cryptocurrencies in Congress would give the currency more recognition, which in turn could prove to be a positive for the industry, per some market watchers. CEO at Crypto.com noted that Facebook would resort to some other way to seize this incredible opportunity in an acceptable way. If Libra fails to make it to the market, some forms of investments and M&A could be in the cards for Facebook.
Any ETF Alternatives to Play Bitcoin?
If you are not sure about the imminent move in bitcoins, you can always tap blockchain ETFs to tap the booming prospects in the space. Blockchains are related but more stable investing options. Per a source, “the blockchain in Bitcoin literally acts a ledger; it keeps track of the balances for all users and updates them as money changes hands.”
So, if investors cannot lay their hands on a bitcoin ETF now, they can definitely familiarize themselves with the concept through blockchain ETFs like Reality Shares Nasdaq NexGen Economy ETF BLCN, Amplify Transformational Data Sharing ETF BLOK and First Trust Indxx Innovative Transaction & Process ETF LEGR. Unlike bitcoin’s massive losses, these three funds lost in the range of 0.6% to 1% in the past five days (as of Jul 17, 2019).