Venture capitalist and Crypto Twitter mainstay Chamath Palihapitiya reckons regulators have hammered the US crypto economy through the regulation-by-enforcement approach favored by the Securities and Exchange Commission (SEC) under crypto-permabear Gary Gensler.
“Crypto is dead in America,” Palihapitiya exclaimed in a recent All-In podcast episode. He is far from the only one to express such an opinion. Even US lawmakers have criticized Gensler’s approach.
“Regulation by enforcement is not sufficient or sustainable,” House Financial Services Committee Chairman Patrick McHenry warned Gensler in four hours of testimony last week.
“You’re penalizing digital asset firms for allegedly not following the law when they don’t know it will apply to them … driving innovation overseas and jeopardizing American competitiveness,” McHenry added.
While much has been said about the US regulators’ hawkish approach to the industry, particularly towards the cryptocurrency exchanges that act as fiat-to-crypto onramps, policy makers in Europe and the UK have tried to woo the burgeoning industry with new regulatory frameworks.
What do the markets think about this?
Bitcoin had definitely softened after Monday’s late session, which was uneven as bulls and bears forced between $26,900 and $28,000, finally closing 0.3% lower at $27,500.
This morning’s Asian trading window has seen more downside at around USD 27,350, bringing week-to-week losses on the BTC/USDT pair to nearly 8%.
Is bitcoin (BTC) in correction mode? – Source: currency.com
Long-bitcoin futures saw outflows above USD 50 million last week. Notably, USD 22 million of these outflows came from US investors, although Canada led the way with USD 32 million in outflows.
Given how bitcoin remains over 65% higher year-to-date, while Ethereum (ETH) remains over 50% higher, amid four full months of intense regulatory pressure, stocks shouldn’t put too much stock in the headwinds caused by the pesky SEC.
Bitcoin and Ethereum’s strong performance in recent months was seen as a response to the turmoil in the traditional financial sector, with investors chasing safe-haven assets to park their money. Gold of the digital and physical variables was seen as the best option.
Therefore, the correction in safe haven markets should not have come as a surprise as things in the TradFi market turmoil eased. After all, it could be worse if the dollar wasn’t also on a downward trajectory.
There is a likelihood that BTC/USDT will trend somewhere around the 27k to 28k channel – a favored position in recent months – until the May 3 Federal Reserve interest rate decision provides some clarity.
ETH/UDST is currently trading just above $1,800, after falling 1.5% in the Asian market.
On a weekly basis, the second largest crypto asset by market capitalization has underperformed against bitcoin, falling close to 14%.
Altcoins perform worse
As has been the theme throughout 2023, the blue-chip altcoin space has largely underperformed against the bitcoin benchmark this week.
Polygon (MATIC) and Solana (SOL) are particularly bearish, with losses in the teens, followed by Cardano (ADA), Dogecoin (DOGE) and Polkadot (DOT).
Further down the value scale, the Bitfinex exchange’s LEO token has steered further recently, adding close to 4% over the past seven days.
LEO’s rise to a market cap of $3.3 billion coincided with the launch of Bitget’s BGB token on the Bitfinex exchange.
Ethereum Layer-2 scaling solution Arbitrum (ARB) has borne the brunt of ETH’s short-term correction, remaining the worst performer among the top-100 altcoin set with losses of over 25% over the past seven days.
The global cryptocurrency market cap fell 0.8% to $1.15 billion overnight, while total value in decentralized finance (DeFi) fell 1.3% to $48.2 billion overnight.
