In recent comments made to CNBC, U.S. Secretary of the Treasury Janet Yellen demonstrated misunderstanding, and perhaps fear, of Bitcoin.
Cynthia Lummis, the first U.S. senator to own Bitcoin, will launch a Financial Innovation Caucus to educate her fellow-senators about Bitcoin and crypto assets.
Senator Cynthia Lummis, the first senator in the history of the United States to own Bitcoin, has revealed plans to launch a Financial Innovation Caucus to educate her fellow senators on cryptocurrency and digital assets.
Appearing on Anthony Pompliano’s podcast on Feb. 2, Lummis announced her intention to establish the caucus, stating:
“We hope to use it as a springboard to educate members of the U.S. Senate and their staff about Bitcoin specifically, but about other opportunities for cryptocurrency and financial innovation and blockchain.”
Lummis stated the caucus will first work to fight the false narrative about digital assets and crypto being used for money laundering, noting that research from blockchain forensics firm Chainalysis indicates “cryptocurrency-related crime is smaller than criminal activity with cash.”
Lummis noted she recently spoke with treasury secretary Janet Yellen — whose recent comments regarding the use of crypto in illicit financing caused concerns regarding an incoming regulatory crackdown to reverberate across the crypto-sphere.
Lummis sought to quell the crypto community’s concerns about Yellen, describing the treasury secretary as having “an open mind” about crypto. However, the senator stated: “It’s going to take a lot of work to get to where we can have an open dialogue that is free from the clutter of seeing this knee-jerk reaction to the concern that all crypto is subject to criminal activity.”
“Crypto regulations need to leave room for innovation.”
Senator Lummis purchased Bitcoin during 2013 and 2014, and has since touted Bitcoin’s utility as a store of value. She likened Bitcoin to the permanent mineral trust fund that she oversaw while working as Wyoming’s state treasurer during the 2000s.
“I was state treasurer in Wyoming during the first part of the 21st century so I was always looking for a store of value. We have in Wyoming permanent funds that are based on extracting minerals and oil and gas from the ground. We take a severance tax […] from minerals and invest it in a permanent fund,” she said.
“The concept of that permanent mineral trust fund is that when the minerals are gone we will still have revenue left over because we invested the proceeds and continued to invest them in a diversified asset allocation […] Bitcoin reminded me of our permanent mineral fund.”
“There will only be 21 million Bitcoin mined, and because it is a finite resource, I see it as a very good store of value,” Lummis concluded.
A handful of altcoins posted double-digit gains while Bitcoin’s relief rally was halted by resistance at $34,000.
As the prospect of the Biden administration passing massive stimulus packages to help get the United States economy going again, conversations about Bitcoin becoming a reserve currency are beginning to pop up again.
Although Bitcoin’s recent volatility has some analysts saying BTC is a cyclical asset rather than a hedge, the price recent movements have caught the eye of retail investors who have shown a renewed interest in cryptocurrencies in general.
Even the Bank of International Settlements has acknowledged that digital currencies may have use and the organization has outlined plans to roll out a variety of central bank digital currency trials this year.
Now that the Bitcoin fear index has flipped from “Extreme Greed” to “Fear,” some investors appear to be taking Warren Buffet’s advice of “buying when there is blood on the streets”.
Institutional investors are wary of future regulation
According to Chad Steinglass, head of trading at CrossTower, Bitcoin’s correction may have initially been triggered by critical comments fromU.S. Treasury Secretary Janet Yellen.
Prior to Yellen’s comments, Bitcoin was experiencing a “post-correction consolidation” and was “rangebound between $34,000 and $38,000” with traders “waiting to see which side of the range would be challenged or broken.”
Steinglass further explaind that Bitcoin’s next steps will be determined by the actions of institutional investors. He said:
“$31,000 was a pocket of strong support, so at least not everyone is selling. We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”
Altcoins bounce back
Many of the top altcoins also recovered nicely from this week’s correction. Polkadot (DOT) rallied 7.09% to a daily high at $18, while Chainlink (LINK) posted a double-digit gain and topped out at $22.31. Tezos (XTZ) has also seen a surge in interest which boosted the altcoin by 15% to $3.36.
The overall cryptocurrency market cap now stands at $949.8 billion and Bitcoin’s dominance rate is 64.4%.