Market Trend｜Bitcoin Begins To Rebound As The Stock Market Takes A Hit, Federal Regulators Prepare To Crackdown On Ethereum

This week acted as an antithesis of the former – instead of continuing the decimating bear market, this week provided a sense of stability, allowing a majority of assets in the top 100 to trade horizontally or to begin rebounding gradually. Upticks in valuation and resistance-breaking momentum allowed the likes of Bitcoin to further test the $20,000 resistance and establish a comfortable trading pattern between the regions of $20,100 and $20,200.

This comes in light of the continued bearish spiral endured by the stock market, whereby quarterly declines have reached levels comparable to that of the 2008 financial crisis, thus suggesting that the decoupling of the two is in full swing and that Bitcoin is attesting to its role as a hedge against inflation. On the institutional side, it has been revealed that Federal regulators, the Securities and Exchange Commission (SEC), are preparing to thoroughly investigate Ethereum following an initiative earlier this year that urged market participants to register their products and services with them. However, on a more controversial note, the SEC has charged Kim Kardashian with the violation of 1930s securities laws for failing to disclose her compensation for her promotion of EthereumMax, meaning she has been issued a hefty fine of $1.26 million.

Bitcoin Begins To Rebound As The Stock Market Takes A Hit

Across the coming week, it can be ascertained that the current bullish momentum and sentiments will continue, further driving assets in the top 50 towards growth, with Bitcoin likely leveraging the remainder of the market with its continued growth (as demonstrated by trading volume highs and record numbers of holders). However, it is likely that Ethereum may suffer in the coming weeks considering that the SEC has gone against its previous testament that Ethereum was not a security. Additionally, it can be expected that more celebrities and influencers who have taken part in illicit promotions and failed to adhere to US securities laws will begin to come under fire as investigations into malicious actors in the cryptocurrency space intensify.

The previous quarter threw the cryptocurrency market into a bearish spiral, with a rapid onset crypto-winter-esque pattern, thrusting a vast majority of the market, including Bitcoin, into substantial lows in comparison to the highs witnessed last year. As a result, the total market cap has dipped below one trillion dollars and many assets have shed significant volumes in comparison to the previous bull market. However, the crypto market hasn’t been alone in this dark bear market. As a result of global macroeconomic factors, the stocks and bonds markets internationally have suffered, with the S&P 500 closing at its lowest levels in 2022 only last week.

Yet, as the cryptocurrency market has demonstrated a progressive aversion against the bear market and begun to break into a more bullish cycle, the stock markets have further suffered from this decoupling. It has been demonstrated that this decline has extended throughout the entirety of 2022 for the US stocks market, with the Nasdaq 100 dropping 33% and the Dow Jone Industrial Average losing more than 20% across the entire year, with Q3 bleeding the markets at an unprecedented rate. Yet, considering that the correlation between Bitcoin and stocks has further declined across the past week with the Nasdaq correlation falling to 0.77 and the S&P falling to 0.75, it can be ascertained that Q4 will continue afflicting the stock market with bearishness.

This week alone, Bitcoin has primarily traded above its 7-day SMA and began to test the $20,000 resistance level, seemingly establishing a new support level between $20,100 and $20,200.

Bitcoin has tested the $20,000 resistance and maintained stability above this level. Source: Coinmarketcap

Federal Regulators Prepare To Crackdown On Ethereum

Historically, the SEC has always regarded both Bitcoin and Ethereum as not qualifying as securities – yet this could be set to change. In a recent announcement, the Securities and Exchange Commission (SEC), have revealed that they plan to investigate and pass judgement on whether Ethereum qualifies as a security. Gary Gensler provided a statement whereby he suggested that Ethereum’s transition from PoW (proof-of-work) to PoS (proof-of-stake) has put the asset under its radar once again.

Additionally, considering that more Ethereum nodes are located in the USA than in any other country, Gensler has acknowledged that they remain under US jurisdiction. However, this could mean that the SEC could assert jurisdiction over Ethereum-based tokens developed around the world. Say an Ethereum-based token was developed in France and served only French residents, the SEC could still intervene as it is likely that a majority of transactions were facilitated by nodes on American soil.

However, this has led to speculation as to who would be penalised in the event that Ethereum is sued or comes under fire. Would it be Vitalik Buterin, the developers, or the community at large?

Gary Gensler Speaking To Congress. Source: FT

Kim Kardashian Is Charged With Unlawfully Promoting EthereumMAX

Kim Kardashian. Source: Spotify

After deliberation by the Securities Exchange Commission (SEC), Kim Kardashian has now been charged for unlawfully promoting and expressing her support for the speculative asset, EthereumMax. As a result, Kardashian has been ordered to pay $1.26 million in penalties and has agreed to support the SEC in its ongoing investigation into the issue.

The regulator confirmed that Kardashian had failed to disclose her payment received (with this totalling $250,000) for the promotion of EthereumMax, with the SEC chairman, Gary Gensler, expressing that: "This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean those investment products are right for all investors.”.

Under federal securities laws, individuals, including celebrities, are obligated to disclose the nature, source, and amount of compensation they receive in exchange for the promotion of an asset. These securities laws have existed in the USA since the 1930s as a means of protecting the integrity of investors.

Kardashian did not deny any of the findings and agreed to pay the penalties, including a $260,000 fee in disgorgement, as well as pre-judgement interest. Additionally, Kardashian is said to be actively supporting the SEC’s ongoing investigation into EthereumMax.

Author: Gate.io Researcher: Matthew Webster-Dowsing
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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