Published: February 5, 2026
Bitcoin declined approximately 2% to trade near $73,000 on February 5, 2026, after U.S. Treasury Secretary Scott Bessent explicitly stated during a House Financial Services Committee hearing that the federal government lacks legal authority to purchase cryptocurrencies with taxpayer funds or to direct banks to provide bailouts to the crypto sector.
The comments — delivered under oath in response to questions about potential government intervention during future market stress — removed any lingering speculation about a “Bitcoin strategic reserve” funded by public money or implicit backstops for exchanges and stablecoin issuers. The remarks contributed to a fresh wave of risk-off sentiment across digital assets, with Ethereum falling below $2,300 and most altcoins posting larger percentage losses. Below is a breakdown of Bessent’s key statements, the immediate market reaction, broader policy context and what traders should watch next.
Bessent’s House Testimony – Key Quotes & Context
During the February 4–5, 2026 hearing titled “Oversight of the Treasury Department,” Secretary Bessent fielded several questions on cryptocurrency policy from both Republican and Democratic members. The most market-sensitive exchanges included:
- “Does the Treasury have authority to buy Bitcoin or other digital assets with taxpayer money?”
Bessent: “No. There is no existing statutory authority for the Treasury to purchase cryptocurrencies as a reserve asset using public funds.” - “Could the government direct banks to provide liquidity or bail out crypto firms in a crisis?”
Bessent: “The federal government does not have the legal power to mandate private banks to extend credit to any specific sector, including digital assets. Any support would require new legislation and would be subject to the same prudential standards as other lending.” - On strategic reserves or national stockpiling:
Bessent: “We continue to monitor developments in digital assets, but any decision to hold cryptocurrencies as part of national reserves would require clear congressional authorization and would need to satisfy strict fiduciary and risk-management criteria.”
The testimony aligns with longstanding Treasury and Federal Reserve positions that treat most cryptocurrencies as speculative assets rather than money or strategic commodities — a stance that contrasts with advocacy from some congressional Republicans and the Trump administration’s earlier pro-crypto rhetoric.
Immediate Market Reaction & Price Action (Feb 5, 2026)
Bitcoin fell from ~$74,800 to an intraday low near $72,900 shortly after the hearing quotes began circulating on financial terminals and social media. Ethereum and major altcoins saw amplified losses (ETH –3.5%, SOL –5–7%). Key observations:
- Funding rates on perpetual futures briefly turned more negative → increased short interest
- Spot BTC ETF outflows accelerated modestly in the afternoon session
- Stablecoin mint/burn data showed elevated USDT redemptions → some capital rotation to fiat
- Bitcoin dominance rose slightly → classic flight-to-safety within crypto
The move was not catastrophic (daily range remained within recent volatility bands), but it reinforced that crypto assets remain highly sensitive to U.S. policy signals — especially those that foreclose potential government support.
Broader Policy Context & Why This Matters
Bessent’s statements arrive amid several overlapping regulatory and legislative debates:
- Strategic Bitcoin Reserve proposals — bills introduced by Sen. Lummis and Rep. Boebert would direct Treasury to purchase and hold BTC, but lack majority support and face strong opposition from Treasury and Fed officials.
- Stablecoin legislation — ongoing Senate negotiations around the Lummis-Gillibrand framework and the House’s STABLE Act; Bessent reiterated that any federal stablecoin regime must include strict reserve, AML, and redemption rules.
- Bank exposure to crypto — regulators remain cautious after the 2023 banking mini-crisis (Silvergate, Signature, SVB); Bessent emphasized that no special carve-outs or bailouts are contemplated for crypto-related entities.
- CLARITY Act & market structure — stalled bipartisan bill that would divide oversight between SEC (tokenized securities) and CFTC (digital commodities); Bessent noted Treasury supports clarity but has not endorsed specific language.
Collectively, the testimony reinforces a regulatory posture of containment rather than embrace — crypto is tolerated and monitored, but not yet treated as a strategic national asset or recipient of public backstops.
Trading & Positioning Considerations on Tapbit
- Sign Up on Tapbit (0% maker fees)
- Deposit USDT or JPY via bank transfer / P2P
- Policy risk hedge: Long XAU/USDT perpetuals or short equity indices on renewed regulatory uncertainty
- Capitulation dip buy: DCA BTC/USDT on pullbacks to $72k–$74k exhaustion zones
- Stablecoin proxy: Hold USDT/USDC while monitoring A7A5 (Russia) and other sovereign stablecoin developments
- Risk control: Max 1–2% account risk per trade; isolated margin; trailing stops below recent lows
Conclusion & What to Watch Next
Treasury Secretary Scott Bessent’s February 2026 House testimony removed any near-term prospect of U.S. government cryptocurrency purchases or sector bailouts, triggering a modest but symbolic **2%** Bitcoin drop to ~$73,000 and reinforcing crypto’s status as a high-risk, unregulated asset class in official Washington thinking. The comments align with the cautious, containment-oriented stance that has dominated Treasury and Fed rhetoric since 2022.
Trade Bitcoin volatility & policy risk on Tapbit:
Disclaimer: Cryptocurrency trading involves significant risk of loss. Prices are highly volatile and can change rapidly. Government statements and regulatory positions can cause sharp movements. This article is for informational purposes only and does not constitute investment advice. Always conduct your own research (DYOR) and never invest more than you can afford to lose completely.
