The crypto-currency market continues to show unimpressive performance as Bitcoin consolidates below $20,000 and Ether plunges further after the post-merge sell-off.
Bitcoin fell below $20,000 again on Sunday, after losing more than $300 from its previous close. The world’s largest crypto-currency by market capitalization fell 1.54 percent to close at $19,804. As of this writing, BTC has lost at least another $1,000 and is trading at $18,600.
In general, all crypto and financial markets seem to be continuing a bearish run this month. Last month’s Consumer Price Index (CPI) inflation data in the U.S. caused a lot of panic, as it shows rising inflation with a 6.3% year-over-year increase. In addition, BTC is down 58.9% from its high for the year. On March 29, the world’s largest coin closed at over $47,000.
Over the past few months, the price of BTC has remained in the $19,400 to $20,100 range and continues to consolidate there. However, BTC could rally back up to $22,000 if stocks recover their losses. Mid-week, BTC managed to break through the $22,600 mark, but failed to maintain support at the $22,000 mark.
Ethereum falls after merger, SEC may investigate ETH after transition
Ethereum recently completed its merger upgrade this week. The second largest crypto by market cap went through what is arguably the most significant event in its history. The move to the Proof-of-Stake (PoS) mechanism would reduce ETH’s energy consumption by nearly 100%, ensuring some environmental benefits.
However, ETH fell nearly 18% this week following a successful merger after several traders sold their assets. Short-term investors bought ETH before the Merger to take advantage of the positive momentum and get new tokens forkens. These investors immediately sold their positions after accomplishing their motives, which led to the fall.
On Thursday, Security and Exchange Commission (SEC) Chairman Gary Gensler said the commission may review ETH after the merger. The SEC boss said the migration from Proof-of-Work (PoW) to Proof-of-Stake could prompt the SEC to regulate ETH as a security. In addition, Gensler noted that assets that allow staking could pass the Howey test. The Howey test is used to determine whether an asset qualifies as a security and should be regulated by the SEC. According to Gensler:
“From the standpoint of this coin…it is another indication that, under the Howey test, the investing public anticipates profits based on the efforts of others.”
Bitcoin could continue to gain acceptance regardless of the drop below $20,000.
Despite the bear market, bitcoin continues to be embraced by some investors. Recently, financial services firm Fidelity Investments announced that it is considering allowing its brokerage clients to trade bitcoin. According to a source close to Fidelity, the company intends to expose its retail clients to the crypto. Galaxy Digital Holdings Limited CEO Mike Novogratz hinted during his speech at the SALT conference that a source had informed him of the plan.
Meanwhile, U.S. multinational investment firm BlackRock recently partnered with Coinbase to provide its clients with access to bitcoin. BlackRock is looking to use its investment management platform, Aladdin, to offer its clients exposure to digital assets.