The cryptocurrency market took a beating on Tuesday with bitcoin losing over 10% in value after U.S. lawmakers grilled Facebook on its cryptocurrency plans, as political and regulatory scrutiny of digital coins intensifies.
The social media giant is fighting to get Washington onside after it shocked regulators and lawmakers with its announcement on June 18 that it was hoping to launch its own digital coin called Libra in 2020.
David Marcus, the company’s top executive overseeing the planned Libra project, answered questions from the Senate Banking Committee. During the hearing, a U.S. senator said Facebook was “delusional” to believe people will trust it with their money.
Facebook’s Libra plan, which is seen as a major step for wider adaptation of virtual currencies, has helped stoke this year’s rally in bitcoin, ethereum and other digital coins.
“Libra is essentially slammed in the Senate,” said Lennon Sweeting, head trader at Coinsquare Capital Markets Ltd. “It’s just headline-driven volatility.”
Digital currencies will likely recover with bitcoin returning to a $11,000-$12,000 trading range, Sweeting said.
At 2:56 p.m. (1856 GMT), bitcoin fell 11.69% to $9,582.12 on the Luxembourg-based Bitstamp exchange. It fell below $10,000 for the first time in two weeks.
The world’s biggest and best-known cryptocurrency climbed to nearly $14,000 in late June, not long after Facebook unveiled its Libra plan. That was still far below its record high of nearly $20,000 set at end of 2017.
Ethereum, the No. 2 virtual currency, lost 13.32% to $198.2 after hitting $190.41, which was its lowest level since May 13.
Other widely followed currencies such as Ripple were down 8% on the day.