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How and why does Libra affect the entire cryptocurrency market?

Jul 17, 2019

The current week began quite calmly; Bitcoin was trading near the psychological level of $11000, noticeably rebounding from the lows of July. At this point, some experts began to talk about the next wave of sales. One of the very strong drivers in the cryptocurrency market is Facebook or rather Libra.

We recall that the official announcement of Libra has provided quite strong support to most coins. After all, the own currency in the largest social network will significantly increase the penetration of cryptocurrency, solving the critical problem of the development in this industry. Today cryptocurrencies practically do not perform the function of a payment instrument, but are merely a speculative tool and, to a certain extent, an instrument for investment.

This statement is fully agreed by Jerome Powell, the chairman of the board of governors of the Federal Reserve System (FRS). He stated this at one of his last speeches in the US Congress. As a consequence, the launch of Libra, followed by integration into Facebook as the main currency, is a powerful bullish fundamental factor for the entire cryptocurrency market and BTC in particular.

But on Tuesday, July 16, the launch of the Libra cryptocurrency will be postponed or even closed.

On Monday, we have already discussed the fact that in the United States, the development of the cryptocurrency market is not in favour.

We mentioned Donald Trump’s tweets, in which he criticizes not only all cryptocurrencies but also Facebook with the Libra project. There is also a bill that appeared in the US Congress. One of the key objectives of it, is to ban the creation of cryptocurrencies by the largest technology companies.

It is quite possible that all this was explicitly devoted to the hearings in the US Senate on the subject of Libra. But David Marcus did not cope with his task.

During the hearings, Marcus was extremely unsure of answering questions, taking pauses for preparation, and in some individual cases could not give a concrete answer at all, hiding behind general phrases.

He could not answer questions about how Facebook intends to solve issues with past user data leaks. 

The Senate did not receive an answer to the question of why Libra is registered in Switzerland, and not in the United States.

All this is extremely negative for the cryptocurrency market, which is actually reflected in the dynamics of price movements.

Bitcoin has fallen more than $1000 to $9500. As a result, all 14 coins with a capitalization of more than $1 billion are in the red zone. At the same time, 8 out of 14 coins lose more than 10% in the last 24 hours. And in this case, the key factor of pressure remains Libra, which previously supported the entire market.

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