The encryption currency ecosystem is facing new challenges. Federal Reserve Chairman Powell announced the acceleration of the digital dollar plan during a congressional hearing, which triggered a strong reaction in the encryption currency market.

The market capitalization of major stablecoins such as USDT and USDC has evaporated by billions of dollars in a short period, triggering panic in the market. Many individual investors' accounts were affected, and the entire encryption currency market experienced significant volatility.

The stablecoin market has been hit so hard primarily due to three key factors:

First, the Federal Reserve compared private stablecoins to a "time bomb," clearly stating its desire for a digital dollar to replace them in the settlement system. This directly threatens the fundamental value of existing stablecoins.

Secondly, regulatory pressure is increasing. The U.S. Securities and Exchange Commission (SEC) has launched an investigation into the issuer of USDC, and the operating company of USDT is also under close scrutiny from regulators.

Finally, large institutional investors began to withdraw their investments. Financial giants like BlackRock and Fidelity have pulled out billions of dollars, and the major holders of USDC sold off 580 million tokens in a single day, leading to a surge in selling pressure in the market.

If digital dollars successfully enter the decentralized finance (DeFi) space, USDT and USDC may face the risk of being delisted by exchanges. In this scenario, the risk of stablecoins losing their peg may be more severe than during the Silicon Valley Bank incident, potentially affecting the prices of mainstream encryption currencies like Bitcoin and Ethereum.

Investors should closely monitor the Federal Reserve's policy decision in September. Once the digital dollar pilot program is determined, volatility in the stablecoin market may further intensify. Meanwhile, tokens linked to real assets, such as MKR and ONDO, may present opportunities for an increase.

Historical experience shows that after an increase in regulatory pressure, decentralized encryption currencies often experience a rebound. Therefore, pure encryption currencies like Bitcoin, Ethereum, and Solana may see opportunities for price increases after undergoing initial adjustments.

In conclusion, Powell's statement has a profound impact on the encryption currency market. Investors need to closely monitor market trends and adjust their investment strategies in a timely manner to meet the challenges and opportunities brought by this significant change.