Federal Reserve Chairwoman Janet Yellen weighed in Wednesday on the hottest investing topic gripping markets today: Bitcoin.
[ibd-display-video id=3017249 width=50 float=left autostart=true] While officials from other central banks around the world have warned that the digital currency's meteoric rise has the telltale signs of a bubble, Yellen was more circumspect during her briefing to reporters.
Bitcoin plays a very small role in the payments system, but is "not a stable store of value" and a "highly speculative asset," she said, after the Fed raised benchmark interest rates again.
She added that the Fed isn't considering adopting digital currencies. And while the Fed isn't dismissing the potential risk that Bitcoin could pose, Yellen said it's unlikely to spark a major crisis.
"So undoubtedly, there are individuals who could lose a lot of money if Bitcoin were to fall in price, but I really don't see that as creating a full-blown financial stability risk," she said.
Prior to Yellen's comments, Bitcoin and its futures contracts took a sharp turn lower, bringing down related stocks as well.
Bitcoin slid 3.4% to $16.591.72, according to CoinDesk , after flattening out earlier, while Cboe 's ( CBOE ) futures tumbled 5.5% to close at $17.055, after being down just slightly earlier.
Other stocks in the cryptocurrency space also sold off. Riot Blockchain ( RIOT ) plunged 18%, Square ( SQ ) lost 5%, and Marathon Patent Group ( MARA ) fell 2%. But Bitcoin Investment Trust ( GBTC ), an investment vehicle that tracks Bitcoin, rallied 2.7%, and Overstock (OSTK) leapt 14%.
The drop underscores the volatility in the cryptocurrency market as more investors show interest in it. The SEC has recently urged caution for anyone considering investing in Bitcoin and other digital assets. UBS' global chief economist this week called the cryptocurrency the " bubble to end all bubbles ."
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
