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Fed chair says cryptocurrencies have no intrinsic value; Barry Silbert remarks Bitcoin unaffected by negative comments

Federal Reserve chain Jerome Powell voiced his concerns this week over the risks posed by cryptocurrencies, CNBC reported.

Speaking in front of the House Financial Services Committee on Wednesday, Powell told members of Congress that "relatively unsophisticated investors see the asset go up in price, and they think: 'This is great; I'll buy this.' In fact, there is no promise of that."

"There are investor and consumer protection issues as well," he said, adding that cryptocurrencies are not real currencies as they have no intrinsic value.

Last November, Powell had said that a fall in the price of crypto-assets would not destabilize an economy, but added that "in the long, long run, cryptocurrencies and things of that nature could matter.”

More recently, Lael Brainard, member of the Board of Governors of the Federal Reserve System, said that the Federal Reserve has been “keenly evaluating developments in fintech and digital currencies through a multidisciplinary lens, combining information technology and policy analysis to study their potential implications for payments policy, supervision and regulation, financial stability, monetary policy, and the provision of financial services.”

Brainard also echoed Powell’s views that while cryptocurrencies currently do not pose a threat to financial stability, but the effects could be broader if they achieve wide-scale use.

Both Powell and Brainard see huge potential in the underlying blockchain technology. Brainard said, “I remain optimistic that the financial sector will find valuable ways to employ distributed ledger technology in the area of payments, clearing, and settlement in coming years.”

Bitcoin has bottomed for the year?

While central bankers are cautioning investors against cryptocurrency investments, Barry Silbert, CEO of Digital Currency Group, believes that bitcoin price is on the path to its recovery.


Speaking on CNBC’s Fast Money, Silbert said:

“A lot of people were looking for the bottom. A lot of institutional money with dry powder looking for an opportunity to get in and I think the bears just kind of ran out of energy, ran out of Bitcoin to sell,” adding that bitcoin price is also looking good from the technical perspective.

He went on to say that, “When the chair of the Fed says negative things about Bitcoin, and Howard Marks says negative things about Bitcoin, and Ken Griffin says negative things about Bitcoin, and Bitcoin doesn’t move, I think that’s a really bullish sign.”

Bitcoin price fell to $5,774 on June 29 – the lowest for 2018 so far. It is currently trading at 7450, at the time of writing (Bitstamp).

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