Bitcoin — alongside other major cryptocurrencies ethereum and XRP — have fallen sharply, raising fears of a crypto market crash after it bubbled up to an all-time high of $4.2 trillion this month (just as Tesla billionaire Elon Musk breaks his silence on crypto).
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The bitcoin price has plunged from an all-time high of $124,000 per bitcoin just last week, dropping around 10% to $114,000, while ethereum and Ripple’s XRP have seen similar declines despite U.S. president Donald Trump dropping a surprise $12.2 trillion crypto bombshell.
Bitcoin and crypto’s decline, coming just as JPMorgan makes a game-changing Federal Reserve flip, follows Wall Street giants issuing a warning that the recently passed Genius Act stablecoin bill could trigger a $6.6 trillion flood of account withdrawals.
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U.S. banking groups that count Wall Street giants such as JPMorgan and Bank of America as members have urged Congress to close a loophole in the recently passed Genius Act stablecoin bill that allows issuers of the dollar-pegged cryptocurrencies to offer yields via affiliates, warning it could trigger huge account deposit flight that would undermine the banking system.
In April, a Treasury Department report estimated that stablecoins could trigger up to $6.6 trillion in deposit outflows, depending on whether they can offer interest or yield, with the stablecoin market expected to grow to $2 trillion by 2028, up from $280 billion today.
“Congress must protect the flow of credit to American businesses and families and the stability of the most important financial market by closing the stablecoin payment of interest loophole,” the report, posted to the Bank Policy Institute website, and addressed to lawmakers, read.
“Banks power the economy by turning deposits into loans. Incentivizing a shift from bank deposits and money market funds to stablecoins would end up increasing lending costs and reducing loans to businesses and consumer households.”
The plea to lawmakers was also signed by the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America and the Financial Services Forum.
Stablecoin adoption wars are heating up following the passage of the Genius Act that laid down rules of the road for the crypto-based dollars.
Tether’s USDT remains the dominant stablecoin but is facing a tidal wave of competition from all angles, including Wall Street giants themselves, technology companies such as Facebook’s Meta, as well as financial technology companies like PayPal and Stripe.
Earlier this year, David Sacks, a technology investor and U.S. president Donald Trump’s crypto czar, said on the All In Podcast he hosts with three other investors that he hopes that eventually the rules will swing in favor of stablecoin issuers, allowing them to directly offer interest to stablecoin holders.
Trump’s sons Eric and Don Jr have publicly said their World Liberty Financial crypto project is a direct challenge to Wall Street following their claims of being “de-banked” in the aftermath of Trump’s 2020 election loss. “Honestly, I would love to see some of the big banks go extinct, because, honestly, they deserve it,” Eric Trump said in May.
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The bitcoin price and crypto market’s latest downturn, coming as just as traders celebrated a fresh all-time high, have raised fears the market could see further declines in coming weeks.
“The crypto market continued its decline on Monday after a pause over the weekend,” Alex Kuptsikevich, FxPro’s chief market analyst, said in emailed comments.
“The total capitalisation fell back to $3.88 trillion, reaching its lowest level in more than two weeks. As expected, altcoins are falling the hardest, with ethereum and XRP losing about 5% in the last 24 hours, twice as much as bitcoin. Bitcoin fell to $115,000, the lowest level in the last 11 days. It is now testing the 50-day moving average, which has been the bullish trend line since April. A consolidation below it will sharply increase the chances of a deeper correction, and a failure below $112,000 — the area of recent lows — will confirm the correction, opening the potential for a decline to $105,000-107,000.”
