Senate Stablecoin Win Should Be Boosting Bitcoin, Other Cryptos. Why It's Not. — Barrons.com

By Elsa OhlenBitcoin and other cryptocurrencies moved mostly sideways by midday Wednesday, as a crypto win in Congress wasn't enough to fend off worries about the Israel-Iran war.Bitcoin, the world's largest digital coin, traded largely flat over the past 24 hours to $104,590, according to CoinDesk data.Meanwhile, altcoins fell. Ether was down 1.3%, XRP fell 1.3%, and Solana was trading 2.5% lower Wednesday.The move comes despite a significant win for the crypto industry Tuesday as the Senate voted in favor of proposed legislation to establish rules for stablecoins — tokens pegged to a fiat currency, typically the U.S. dollar, and backed by reserves. The bill now moves to the House of Representatives.The proposed legislation passed a procedural vote in May.While stablecoins don't fluctuate in price like Bitcoin, Ether, and XRP, efforts to regulate stablecoins are seen as a first step to integrate cryptocurrencies into financial systems. That is something many crypto analysts see as a good thing.The passage of the bill represents "the legitimization of digital assets, " said Marcin Kazmierczak, COO at RedStone, a decentralized finance and data company.But crypto investors are busy looking at how the conflict in the Middle East develops. Traders typically prefer safer assets like bonds or gold in times of heightened uncertainties. They tend to move away from many stocks and cryptos, leading the prices of those assets to fall.The next U.S. interest-rate decision is also only hours away. While the Federal Reserve is all but certain to keep interest rates steady later Wednesday, any signals that cuts are coming faster or slower than expected are likely to affect both stocks and cryptos. Lower borrowing costs typically increase traders' appetite for riskier assets such as digital coins, and vice versa.The Israel-Iran conflict adds another layer of complexity to the interest rates debate. Its effect on oil prices may lead to higher inflation, which is one of two key considerations alongside employment for the Fed.Write to Elsa Ohlen at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.