Is the cryptocurrency boom fueled by Trump coming to an end as a Federal Reserve governor issues a warning?
Is the cryptocurrency boom fueled by Trump coming to an end as a Federal Reserve governor issues a warning?
An assessment has emerged that the optimism that dominated the cryptocurrency market following the launch of the Donald Trump administration is gradually losing strength amid regulatory uncertainty and risk management moves by institutional investors.
According to cryptocurrency-focused media outlet Cointelegraph on February 10 (local time), Federal Reserve Governor Christopher Waller, speaking at a Global Interdependence Center conference held in La Jolla, California, said, "Some of the excessive optimism that entered the crypto world with the current administration is fading." Waller analyzed that the recent sharp sell-off in the market occurred as major financial institutions adjusted their risk positions.
Waller explained that volatility is a common feature of the cryptocurrency market and that large price crashes are also a normal phenomenon. Comparing current price levels to the past, he said, "If you had said a few years ago that Bitcoin (BTC) was $10,000, everyone would have thought you were crazy." He added that companies from the mainstream financial sector that had entered the crypto market are now selling assets and reducing risk exposure amid the recent turmoil.
The slow progress of virtual asset regulatory bills under discussion in the U.S. Congress was also cited as a factor contributing to market unease. Waller noted that discussions on the U.S. crypto market structure bill, known as CLARITY, have reached a stalemate in Congress. He said, "Everyone thought the bill would pass and clear the way forward, but now the discussions have stalled without being finalized."
Even amid the regulatory vacuum, the Federal Reserve plans to accelerate its own institutional preparations. Waller said he hopes to put forward by the end of this year a proposal for so-called Skinny Master Accounts, which would allow limited access to the Fed’s payment systems for banks, fintech firms, and cryptocurrency companies. This move reflects the Fed’s proactive response in a situation where comprehensive crypto regulatory legislation is being delayed.
The broader market appears to be under pressure, with Bitcoin prices pushed back into the $60,000 to $70,000 range and sharp declines in the share prices of related companies such as Strategy Inc., Coinbase Global Inc., and Marathon Digital Holdings Inc. Waller’s remarks illustrate that as the cryptocurrency market becomes more closely linked to the traditional financial system through hedge funds and exchange-traded funds, it is becoming more sensitive to institutional risk management decisions.
*Disclaimer: This article is for investment reference only, and no responsibility is assumed for any investment losses based on it. The content should be interpreted solely for informational purposes.*
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