Digital currencies have staged a strong comeback. After a sharp decline at the beginning of the year, cryptocurrencies are now rebounding across the board. The price of Bitcoin surged by as much as 5.5%, reaching $69,027, while Ethereum climbed up to 7.5%, hitting $2,059.2. According to data from CoinGlass, over the past 24 hours, a total of 89,241 traders globally were liquidated, with total liquidations amounting to $265 million.
This sharp rise in digital currencies may be linked to remarks from U.S. Treasury Secretary Janet Yellen. On Friday local time, Yellen stated that Congress should pass a bill this spring to establish federal regulations for digital assets and submit it to President Donald Trump for his signature into law. Her comments instantly ignited the cryptocurrency market.
During the early Asia-Pacific trading session on February 14, Bitcoin broke through $69,000 and Ethereum surpassed $2,050, both posting significant 24-hour gains, leading to a broad rally across the entire digital currency market. So, what exactly happened?
On Friday local time, U.S. Treasury Secretary Janet Yellen expressed that Congress should pass a bill this spring to create a federal regulatory framework for digital assets and present it to President Trump to be signed into law. When asked in an interview about the progress of the bill against the backdrop of recent declines in the crypto industry, Yellen noted that the proposed legislation, called the Digital Asset Market Clarity Act, could "significantly soothe market sentiment" amid high volatility. She added that while cryptocurrency firms had attempted to block the legislation, a bipartisan group of lawmakers is now pushing for its passage. Yellen also warned that this bipartisan coalition could dissolve if Democrats gain control of the House of Representatives in November.
Yellen's influence on the digital currency market is considerable. Previously, during a heated hearing of the U.S. House Financial Services Committee, Yellen was asked whether the U.S. Treasury had the authority to acquire Bitcoin or other cryptocurrencies. Yellen clearly stated, "I do not have that authority, and as Chair of the Financial Stability Oversight Council (FSOC), I do not possess that power either." Subsequently, the digital currency market experienced a sharp sell-off, with Bitcoin falling to around $60,000 at one point.
Diverging views are emerging regarding the future trajectory of digital currencies. As Bitcoin continues to adjust, Grace Chen, CEO of Bitget, believes the recent weakness is not related to a deterioration in fundamentals but is more a result of a structural liquidity shock that hit the crypto market on October 10 last year. She emphasized that interest rates are declining, the new U.S. administration is friendly toward cryptocurrencies, and global blockchain technology is being widely applied to real-world assets like stablecoins. Large asset management companies are also actively embracing this space, with firms like BlackRock increasingly incorporating cryptocurrencies into their investment portfolios and business strategies.
October 10 last year marked a turning point for the cryptocurrency market, when a major liquidity event triggered a sharp contraction in trading activity. Over the past four months, Bitcoin's price has likely undergone structural changes due to low liquidity. Although conditions across the industry remain "quite challenging," Bitcoin may present opportunities for investors with a multi-year time horizon.
However, Ari Paul, founder of BlockTower, believes the crypto market is at a critical crossroads, facing two potential outcomes. Paul pointed out that one possibility is that the crypto market has already peaked, particularly for this generation of digital assets. Cryptocurrencies have benefited from strong tailwinds such as increased mainstream recognition, political support, and regulatory easing. Yet, real-world adoption has been slow, and experiments like El Salvador's Bitcoin adoption and various corporate trials have yielded mixed results. This suggests that further declines are still possible, especially if large-scale liquidation events occur. Paul also expressed concerns about the long-term viability of Bitcoin.