Bitcoin sank to five-month lows on Wednesday, after congress grilled Facebook (NASDAQ:FB) co-founder and CEO Mark Zuckerberg over the proposed Libra digital-currency. Lawmakers expressed their skepticism and Mark Zuckerberg openly admitted that he did not know if Libra was going to work.
The House Financial Services Committee voiced concerns over Libra’s potential impact on the financial system, user privacy and the danger of it being used for money laundering and criminal activities. Zuckerberg stated that Facebook would leave the nonprofit body governing Libra, if other members decided to proceed without regulatory approval.
During the hearing, United States Congressman Brad Sherman condemned cryptocurrencies in general, arguing:
“Cryptocurrency either doesn’t work, in which case investors lose a lot of money, or it does achieve its objectives perhaps and displaces the US dollar or interferes with the US dollar being virtually the sole reserve currency in the world.”
In support of Libra, Zuckerberg stressed that China is advancing rapidly with its own cryptocurrency payment system that may undermine the United States as the global financial leader.
He stated: "China is moving quickly to launch a similar idea in the coming months" and added: “Libra will be backed mostly by dollars and I believe it will extend America’s financial leadership as well as our democratic values and oversight around the world.”
In addition to the doubts of Congress, Libra suffered a setback earlier this month after financial giants including PayPal, Visa (NYSE:V), Mastercard (NYSE:MA), eBay (NASDAQ:EBAY) and Stripe withdrew from the Libra Association - the nonprofit organization formed to oversee the digital currency’s creation and rollout.
Looking at the daily chart, we can see that on Wednesday Bitcoin dipped below the 200-period moving average for the first time since April of 2019. The 200-period simple moving average on the daily chart is widely viewed as a key ‘line in the sand’ separating bullish and bearish territory. Price is contained within a well defined falling wedge pattern and Bitcoin bears will be eyeing a potential breakout to the downside.
