Why Bitcoin and Ether Dropped on Monday


As the cryptocurrency ecosystem celebrated Ethereum’s The Merge move last week, the cryptocurrency market was in the red on Monday morning.

On Monday morning, cryptocurrencies are in the red. According to data from Coinmarketcap, at 10:30 am Bitcoin is trading at $18,500, which is once again falling below the token threshold of $20,000. The cryptocurrency lost 16% of its value in a week, and 8% in a single day.

Ether, for its part, is not doing much better: the asset is trading at $1,300, and its value has fallen more than 25% in a week, including 10% since Sunday, to return to its lowest level since midweek. July.

As a result, the total capitalization of the cryptocurrency continued to decline, reaching $900 billion on Monday, far from the token threshold of $1,000 billion. As a reminder, this capitalization reached a historic peak last November, at about $ 2,800 billion.

New Federal Reserve meeting

How do we explain the new decline in cryptocurrencies? On the other hand, these assets are still tied to the traditional markets, which are still stretched as the Federal Reserve prepares to hold its new monetary policy meeting on Tuesday and Wednesday, when it is expected to announce another rate hike.

This Monday around 10:35 a.m., CAC 40 It lost 0.83% after having already fallen by 2.17% throughout the past week. Similarly, futures contracts in the US markets declined (decreases ranged between 0.9% and 0.7%) on Monday. In general, the stock markets are penalized for risk aversion, and cryptocurrencies are considered a part of risky assets, and therefore they are punished by reducing the investments of individuals and professionals.

Ether in the crosshairs of the Securities and Exchange Commission

Moreover, if ether falls more sharply than bitcoin, it is also due to a certain context. Last week, the Ethereum blockchain She successfully completed her merger named The Merge. This transition, which consisted of moving from “Proof of Work” to “Proof of Stake” mode of operation, did not leave the policeman of the American Stock Exchange indifferent.

The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, said last Thursday Cryptocurrencies that use “Proof of Stake” (or PoS for “Proof of Stake”) can be considered “transferable securities” after passing the Howey test. Wall Street Magazine. “Howey’s test determines whether an asset qualifies as an ‘investment contract’ and is therefore subject to federal security laws,” the media said.

On the other hand, the Chairman of the Securities and Exchange Commission was not specifically qualified for ether or any other cryptocurrency according to the Wall Street Magazine, but the system itself is called “Proof of Stake”. However, given the move to The Merge of Ethereum, such a message from the US stock market policeman seems undoubtedly sound. So far, Gary Gensley has said that bitcoin does not fit into the category of securities.

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