Bitcoin extends fall, drops below $35,000 level; ether slumps 4%

According to experts, the sell-off has come on the back of former US Federal Reserve Chairperson Janet Yellen’s comments that cryptocurrencies are “mainly” used for illegal activities. She is US President’s Joe Biden’s nominee for the treasury secretary.

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“You’re absolutely right that the technologies to accomplish this change over time, and we need to make sure that our methods for dealing with these matters, with terrorist financing, change along with changing technology. Cryptocurrencies are a particular concern. I think many are used – at least in a transaction sense – mainly for illicit financing. And I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels,” Yellen said.

Ether, which had hit an all-time high a few days back, slumped 5% to $1,303. Another major cryptocurrency stellar eased 0.5% to $0.29.

Explaining recent price movements in ether, Nischal Shetty, chief executive officer, WazirX, said, “This week, we saw ethereum prices hitting all-time high. This price rally also led to a drop in the amount of ether held on centralized crypto exchanges around the world. This plunge is a strong indicator of the fact that people are looking to hold ether for a long period. This is also an expected behavior considering many people would be waiting for Ethereum 2.0 to launch when Proof-of-Stake (PoS) comes in. They probably want to hold their tokens until then, knowing that there would be an even greater supply crunch of ether when the PoS chain is launched.”

There is more investor confidence, people have seen the power of DeFi, and they know that DeFi is going to be huge, Shetty said. “It’s an enormous technological innovation and Ethereum is leading in this ecosystem. So as DeFi grows, the need for Ether as a currency in the Ethereum blockchain will increase.”

DeFi or decentralized finance is an experimental form of finance that does not rely on central financial intermediaries.