28.10.202115:20 Forex Analysis & Reviews: El Salvador buys another 420 bitcoins, Stablecoins poses threat to the American economy

While the Bitcoin and Ether exchange rate went on a slight correction, and the expectations of speculative traders for updating historical highs have decreased, the authorities of El Salvador said that they continued to acquire the first world cryptocurrency and do not intend to stop there. In addition, the speech of the director of the U.S. Consumer Financial Protection Bureau, Rohit Chopra, on the topic of the risks that stablecoin carries draw attention. Let's deal with it all.

El Salvador adds 420 new BTC

According to recent reports, El Salvador has bought another 420 bitcoins, taking advantage of the recent price drop. The President of El Salvador, Nayib Bukele, wrote about this on Twitter. At the moment, the authorities own 1,100 coins in total. On September 6, Bukele announced the first purchases of bitcoin and said that it is equated to the national currency. Since September 7, bitcoin has become legal tender along with the dollar.

However, not everyone considers Bukele's act to be correct, and there are quite a few skeptics who are sure that this kind of "trick" can cost El Salvador dearly. More specifically, $ 1.3 billion, which they could lose due to different views with the International Monetary Fund. However, according to the President of the Central Bank of El Salvador, the first-of-its-kind implementation of Bitcoin in El Salvador is not an obstacle for the government to reach the above loan agreement. According to the President of the Central Bank Douglas Rodriguez, at present, the cryptocurrency has almost lost its reputation as a speculative asset and will very soon prove its use as a legal and alternative payment system. He also expects that due to the high volatility of Bitcoin, the country's economy could add about 9.0% this year. "We don't see any risks. The only risk is the risk of bitcoin growth, which is associated with making a profit," said Rodriguez during a virtual meeting in San Salvador.

As a reminder, news broke this week that El Salvador's digital Bitcoin wallet Chivo has removed the pricing feature that allowed users to quickly profit from trades. This decision was made in order to minimize speculation with the world's largest cryptocurrency.

Stablecoins are a threat to the economy

Stablecoins pose risks to the financial system as more technology and payment companies use or plan to use digital currencies that are not regulated by anyone, according to Chopra. In his speech for the first time to Congress since taking over the CFPB, he said the bureau will analyze and collect data on how companies like Facebook Inc. plan to use the tokens.

This is part of a larger program aimed at researching how tech giants collect and use consumer data. "Stablecoins are right now primarily used for speculative purposes," Chopra said during a House Financial Services Committee hearing. "But, if cryptocurrencies are to be embedded in large social networks or tech companies, it's even scary to imagine what it can scale into quickly."

Chopra's speech consisted of criticism of Facebook Inc, which recently reiterated its desire to issue its own token, which was met with harsh backlash from regulators. The authorities are alarmed by the rapid growth of stablecoins, a market that is already $131 billion and which is critical for the crypto industry. One of the things that officials fear the most is the sudden, unregulated surge in public adoption of tokens that big tech companies like Facebook Inc. Note that Facebook's latest attempt to create its own Diem token failed under pressure from the regulator.

Mastercard recently decided to give banks access to cryptographic credit and debit cards. Mastercard Inc. signed a deal with crypto firm Bakkt, which will make it easier for crypto wallet owners to spend their funds.

Chopra also said that the CFPB is one of several agencies that are concerned about systemic risks. A group of officials that are part of the President's Working Group on Financial Markets is expected to release a report this week outlining their recommendations for token regulation.

As for the technical picture of Bitcoin

Wednesday's head-and-shoulders pattern is now being tested for strength and a breakdown of support at $59,400 with subsequent consolidation below may lead to a larger downward correction of the trading instrument to the $54,444 area, and then to a low of $50,900. At the moment, the 200-day moving average is in the 45,000 area. It is possible to speak of a return of interest in Bitcoin after it has gone beyond $59,400, as well as after consolidating above the resistance of $62,800, which will open a direct road to the historical maximum in the $66,500 area.

As for the technical picture of the Ether

The downward movement from historical highs, which were just a few steps short of updating, does not yet indicate the full-scale development of the bear market. This is nothing more than a technical correction. Even if we fall into the area of $3,600 and update $3,405, such a development of the situation will not yet lead to a reversal of the bull market on the Ether. The main task of buyers is to maintain control above $3,950. In this case, a return of $4,367 is provided in the near future.