KEY POINTS

  • The U.S. Digital Dollar will be positive for the price of Bitcoin as it is a sign of mass adoption of cryptocurrencies
  • Fed Chair Jerome Powell said in February that the Fed is working on its own version of cryptocurrency
  • Bitcoin continues to trade at $6,000 prices after suffering a huge selloff this month along with stocks and oil amid coronavirus fears

Back in February, Federal Reserve Chair Jerome Powell hinted that the Fed was working on a digital version of the U.S. dollar when he spoke in front of the U.S. House Financial Services Committee.

That time it looked as though Bitcoin (BTC) was up for a roaring 2020 following its surprisingly bullish performance in January that continued to pick up steam in the first two weeks of February. BTC's price even reached $10,000 for the first time since October 2019.

Stocks were also posting record highs at that time. However, the entire speculative mood of the financial markets was upturned when the impact of the novel coronavirus was realized to be a lot more serious than what was initially thought to be.

Some point to the need for transacting with cryptocurrencies or digitized cash as a way to prevent the spread through the physical forms of payment, despite no scientific consensus for how COVID-19 spreads.

Still, there's no indication for when the Fed will implement a digital dollar, but if it does, plenty of those in the crypto space think it will boost the price of the benchmark crypto.

"The idea of a Fed digital dollar will undoubtedly boost bitcoin prices. It is a strong indication of mass adoption for cryptocurrencies pushed by none other than the government." Ashish Singhal, Co-Founder, and CEO of CoinSwitch.co and CRUXPay, told International Business Times.

Bitcoin took a more massive blow than stocks in mid-March, dropping to below $4,000 in the process. The top crypto hasn't reclaimed much of what it had lost as it currently stagnates around the $6,000 region.

And if a U.S. Digital Dollar does enter mainstream finance, according to Jason Wu, Founder, and CEO of DeFiner, it "will help educate the public for accepting blockchain-based services and eliminate the natural fear and risk perception of new technology."

"Bitcoin is the digital gold in the world of digital assets, the GDP of the digital world is captured by Bitcoin, therefore the price trend of Bitcoin will definitely go up" Wu added.

But a U.S. Digital Dollar will still largely depend on how far the government will support it. The proposed cryptocurrency of Facebook, Libra, is currently in limbo as it was heavily scrutinized by Congress back in October.

"Currently, a lot of technical details around the proposed Fed digital dollar is not available; we will have to wait and see whether it leans more toward the centralisation or the decentralisation path," said Singhal.

bitcoin-developers-suspect-site-being-targeted-by-state-sponsored-hackers A bitcoin fork, segwit2x, has been canceled. Photo: IStock