Bitcoin briefly rises above 59,000 USD

Bitcoin briefly rises above 59,000 USD
Bitcoin briefly rises above 59,000 USD

The central theses

  • The price of Bitcoin rose above $59,000 in early U.S. markets on Wednesday before stabilizing somewhat at around $57,600.
  • Germany is still in the process of selling bitcoins it seized from a piracy website to cryptocurrency exchanges, with the value of the country’s on-chain holdings now estimated at less than $1 billion for the first time.
  • Inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) have totaled over $500 million so far this week.
  • The U.S. House of Representatives is voting on a bill that could overturn the Securities and Exchange Commission’s (SEC) current policy on cryptocurrency custody by traditional banks, but the vote is likely to fail.
  • The chairman of the Commodity Futures Trading Commission (CFTC) expressed concern about the lack of legislative action on cryptocurrencies in his testimony before Congress on Wednesday.

The price of Bitcoin (BTC) rose above $59,000 in the early US morning on Wednesday before settling back at the $57,400 level in the afternoon. The largest cryptocurrency by market capitalization remained range-bound due to selling pressure from Germany and inflows into Bitcoin exchange-traded funds.

German sell-off, spot Bitcoin ETF inflows stabilize Bitcoin

In Germany, government-seized bitcoin holdings have fallen below $1 billion for the first time after several days of dumping on crypto exchanges. The initial on-chain stash of nearly 50,000 bitcoin originally seized by Germany from online piracy website Movie2k has now dwindled to 13,110, according to data from Arkham Intelligence.

Despite the Bitcoin dumping from Germany, US spot Bitcoin ETFs (exchange-traded funds) saw strong inflows in the first two days of the week. According to Farside Investors, these ETFs recorded a total of $511.2 million in inflows on Monday and Tuesday.

Congress and Democrats focus on crypto

Wednesday could also be an important day for U.S. crypto regulation, as the U.S. House of Representatives votes on an attempt to override President Biden’s veto of a bill that would repeal the Securities and Exchange Commission’s (SEC) special regulations for crypto asset custodians. The SEC directive poses significant challenges for traditional financial firms seeking to offer crypto custody services.

A repeal of the SEC’s rule would make it easier for traditional banks to serve as custodians of digital assets for their customers. But Caitlin Long, CEO of Custodia Bank, said on social media platform X on Wednesday that she does not believe Congress has enough votes to override Biden’s veto.

Ironically, a meeting between representatives of the crypto industry, key Democratic politicians and White House officials was also scheduled for Wednesday. The meeting was organized by Democratic Rep. Ro Khanna, who represents a California district that includes Silicon Valley.

However, Democrats as a whole have been slow to recognize crypto supporters as a potential voting bloc, while Republican presidential candidate Donald Trump has been openly engaging with them for several months, offering to ease the SEC’s regulatory burden on the crypto industry under the Biden administration. Earlier this week, Republicans made various protections for crypto, such as the right to mine Bitcoin and self-custody of crypto assets, part of their official party platform.

CFTC Chairman calls for legislative response to crypto

Also on Wednesday, a Senate committee held a hearing on digital commodity oversight, with Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam testifying.

Behnam noted the lack of legislative action in his opening remarks, stating, “What has troubled me most throughout the expansion of this digital asset class is that while ordinary Americans fall victim to one digital investment scam after another, there is no comprehensive legislative response. I have been asked repeatedly by members of Congress what I am doing to protect their constituents.”

In addition, market observers watched the second day of Federal Reserve Chairman Jerome Powell’s testimony before Congress on Wednesday for clues as to which direction interest rate policy might develop this year.

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