After rising to an all-time high of $4.2 trillion this month (just as Tesla billionaire Elon Musk breaks his silence on crypto), Bitcoin, along with other major cryptocurrencies ethereum and XRP, have plummeted, igniting worries of a crypto market meltdown.
The bitcoin price has plummeted from an all-time high of $124,000 per bitcoin only this week, falling approximately 10% to $114,000, while ethereum and Ripple’s XRP have witnessed similar drops, despite US President Donald Trump’s stunning $12.2 trillion crypto bombshell.
After Wall Street behemoths warned that the newly enacted Genius Act stablecoin bill might lead to a $6.6 trillion rush of account withdrawals, Bitcoin and cryptocurrency have declined, coinciding with JPMorgan’s historic Federal Reserve flip.
Congress has been urged to close a loophole in the recently passed Genius Act stablecoin bill that permits issuers of the dollar-pegged cryptocurrencies to offer yields via affiliates. U.S. banking groups, which include Wall Street behemoths like JPMorgan and Bank of America as members, have warned that this could lead to a massive flight of account deposits that would threaten the banking system.
A Treasury Department assessment from April predicted that, depending on whether stablecoins can provide interest or income, they might cause deposit withdrawals of up to $6.6 trillion. The stablecoin industry is predicted to increase from $280 billion to $2 trillion by 2028.
Congress must close the stablecoin payment of interest loophole in order to safeguard the flow of credit to American people and companies and the stability of the most significant financial market, according to the paper, which was sent to lawmakers and posted on the Bank Policy Institute website.
Banks convert deposits into loans, which fuel the economy. It would ultimately result in higher lending costs and fewer loans to consumers and companies if incentives were offered to switch from bank deposits and money market funds to stablecoins.
The Financial Services Forum, Independent Community Bankers of America, Consumer Bankers Association, and American Bankers Association also signed the appeal to Congress.
Following the Genius Act’s enactment, which established guidelines for the development of crypto-based currencies, the adoption battles for stablecoins are intensifying.
The leading stablecoin, Tether’s USDT, is up against fierce competition from Wall Street behemoths, internet firms like Facebook’s Meta, and financial technology firms like PayPal and Stripe.
U.S. President Donald Trump’s crypto czar and technology investor David Sacks stated earlier this year on his All In Podcast, which he hosts with three other investors, that he hopes regulations will eventually change to allow stablecoin issuers to directly offer interest to stablecoin holders.
After Trump lost the 2020 election, his sons, Eric and Don Jr., openly declared that their cryptocurrency project, World Liberty Financial, is a direct threat to Wall Street. Eric Trump stated in May that he would “love to see some of the big banks go extinct because, honestly, they deserve it.”
The recent dip in the price of bitcoin and the cryptocurrency market, which occurred just after traders celebrated a new all-time high, has sparked concerns that the market may witness further drops in the weeks to come.
According to emailed remarks from Alex Kuptsikevich, head market analyst at FxPro, the cryptocurrency market resumed its downward trend on Monday following a weekend lull.
“The overall capitalization dropped to $3.88 trillion, the lowest level in over two weeks. With ethereum and XRP losing over 5% in the past day, twice as much as bitcoin, altcoins are naturally declining the most. Bitcoin dropped below $115,000, its lowest point in the previous eleven days. Since April, the bullish trend line has been the 50-day moving average, which it is currently challenging. The likelihood of a further correction will be significantly increased by consolidating below it, and a collapse below $112,000—the region of recent lows—would validate the correction and allow for a drop below $105,000–107,000.
