Call it the Libra effect.
Bitcoin price rallied and broke past the $9,000 mark in the breathless run up to Facebook’s announcement of Libra, its cryptocurrency and blockchain, to provide banking services in emerging markets. There was an impressive 23% increase in its price within a week. (For those keeping count, the cryptocurrency is up by more than 150 percent since the beginning of this year.)
Traders believe that Facebook’s interest in cryptocurrencies and blockchain will further bring attention to the technology and attract investors and developers to it. The Menlo Park-based company has also gathered an impressive list of partners for its effort, further proof that blockchain and cryptocurrencies are going mainstream.
The benefits to Bitcoin price from Facebook’s interest are mirrored in the latter’s stock price. In fact, a graphical representation of the price movement for both entities display a similar price trajectory.
On June 3rd, Facebook’s shares were trading at $162.07. a flurry of bullish analyst reports lauding the company’s move into crypto pushed the stock price to a high of $191.69 on June 18th, the day that the white paper was released. Implementation of crypto and blockchain technology could allay public fears about privacy on Facebook’s platform and provide another revenue source.
Initial excitement over the news, however, has given way to questions. Facebook’s release of documentation associated with Libra has generated questions. There are also reports detailing problems with its plans. There is also the fact that the proposed blockchain is under development and will not become completely permissionless for another five years or so.
Regulators have also gotten in on the act. The Senate Banking Committee has scheduled a hearing to learn more about Facebook’s plans while Rep. Maxine Waters (D-CA) has asked for a “moratorium” on the project. These developments are reflected in Facebook’s stock price, which has mostly flat-lined since the announcement. Bitcoin price fell but the pullback was brief. The cryptocurrency is changing hands for $188.04, mostly unchanged from its price yesterday.