Bitcoin and Altcoins: Decline After Yellen Comments on Illegal Crypto Usage

Janet Yellen’s critical comments about cryptocurrencies have largely dampened the market. Ethereum hit a new all-time high shortly before that.

On Tuesday, Ether (ETH) recorded a bullish breakout. In the process, the price rose to a new all-time high at US$1,428.

While the move was technically driven, the fundamentals for Ethereum continue to improve. Less than a month after its launch, US$3.8 billion worth of ETH is now stored on the Eth2 blockchain.

The rapid price rise has attracted the attention of professional traders, but Cointelegraph analyst Marcel Pechman warns that the Ether surge to a new high has also been accompanied by more short positioning.

ETH/USD 4-hour chart. Source: TradingView
Ether’s breakout to a new high had little impact on the bitcoin price and apparently critical comments from former Federal Reserve Chair Janet Yellen had a negative impact on the market overall today.

Yellen, who was nominated as Treasury Secretary by President Biden, said that cryptocurrencies are used „primarily for illicit financial purposes“. She said this during a hearing before the Senate Finance Committee and also advocated for greater financial aid. She called on Congress to „act in a big way“ when it comes to helping the flagging US economy.

Institutions remain optimistic

Cryptocurrency market daily performance. Source: Coin360
Despite the slight correction, institutional investors are still optimistic about Bitcoin’s long-term prospects. A recent forecast by hedge fund Vailshire Capital Management said a breakout was imminent. PlanB, the creator of the popular stock-to-flow model, predicted that the bitcoin price could close near $48,000 this month.

In contrast to the crypto market, traditional markets ended the day very strong as Yellen’s call for additional economic stimulus was seen as a positive by Wall Street. The S&P 500, Dow and NASDAQ all ended the trading day up 0.81 percent, 0.38 percent and 1.5 percent respectively following Yellen’s comments.

BTC/USD daily chart. Source: Coin360
Despite Yellen’s negative view, positive developments in several blockchain projects have caused selected altcoins to rise.

The price of Enjin (ENJ) rose 71 percent after the project was approved for trading by Japan Virtual Asset Exchange Association (JVCEA). In addition to Ether (ETH), Bitcoin Cash (BCH) also performed very well, rising 7.46 per cent to US$546.

The total market capitalisation of all cryptocurrencies now stands at 1.046 trillion US dollars. US dollars and Bitcoin’s dominance amounts to 65 percent.