Biden’s Central Bank Digital Currency (CBDC) Announcement Slashes Stablecoins Despite Recent Gains

1 min read

The Central Bank Digital Currency has just been announced, earlier than expect. It is to be in direct competition with the Chinese yuan and will be backed by the US federal reserve and it would also be in direct competition with all cryptocurrencies. This early announcement has caused a loss of confidence, despite the fact that Ukraine and Russia are using cryptocurrencies to fund their war spending.

Cryptocurrencies Fall After Biden’s Digital Dollar Announcement
  • Bitcoin was below $40,000, the most valuable cryptocurrency in the world, and had already been falling around 10% in the last week.
  • After the executive order issued by the US president, cryptocurrencies lost almost everything they had gained in the previous days.

A day after United States President Joe Biden issued an executive order directing digital asset risks to be assessed and announcing the launch of the digital dollar, cryptocurrency markets fell again after a brief recovery earlier in the week.

Cryptocurrencies have had very volatile behavior in the last three weeks. All have had bad days, but on Thursday the fall has been general. From the BTC to the Qtum token that ranks 100th in the ranking.

Most of the cryptocurrencies woke up, accumulating heavy losses for weeks. Despite the fact that the previous day almost all of them had added a rebound of approximately 10%.

Biden’s announcement on the regulation of cryptocurrencies and the order to accelerate the issuance of the digital dollar that will compete with the Chinese yuan, has strongly impacted the price of cryptocurrencies.

The central bank digital currency (CBCD), which is expected to be issued sooner than initially planned, would be backed by the US Federal Reserve and would enter into direct competition with all private cryptocurrencies including stablecoins.

BTC lost everything gained in the previous days

The previous days cryptocurrencies gained ground thanks to the war in Ukraine. Both Russians and Ukrainians are using cryptocurrencies to finance their war spending. While Ukraine receives donations from the entire world in crypto, Russia is reportedly using it to cover itself after the financial embargo of its assets in the West.

On Thursday morning, Bitcoin fell back to the $40,000 band, thus erasing everything gained in the previous days and especially on Wednesday when Biden made his announcements. At 9:51 am (ET) BTC had a negative variation of 7.27% and its price was located at $38,824.

“Although the initial reaction to Biden’s digital assets executive order was ‘it’s not as bad as it could have been,’ a closer look at the details shows that it does not eliminate potential regulatory risk,” said senior market analyst at Oanda Asia-Pacific, Jeffrey Halley, speaking to Bloomberg.

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