Crypto Market Rallies as SEC Wraps up Ethereum Probe

2024-07-03, 06:30

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![](https://gimg2.gateimg.com/image/article/17199872271690791857hotspot.jpeg)
## [TL; DR]
According to the SEC's latest revelation ETH is a commodity not a security.

The prices of LDO, MKR and ETH spiked after the news of SEC’s designation of ETH as a commodity.

ETH is within a bearish market condition with no signs for a rebound.

## Introduction 
Current information on the crypto market has hinted that the United States SEC has given the green light [that Ethereum (ETH) is a commodity, not a security](https://www.gate.io/learn/articles/is-ethereum-a-security-currency-or-commodity/2783 "that Ethereum (ETH) is a commodity, not a security"), which has generated a positive vibe within the digital sector. Probably, this will be the best regulatory clarity the SEC has given during 2024 and will set pace for the accelerated growth of the crypto industry. This article discusses the market’s response to the crypto news that the US SEC [has completed its investigation on Ethereum 2.0](https://www.gate.io/learn/articles/crypto-pulse-9/3293 "has completed its investigation on Ethereum 2.0").

## The Least Expected Blockchain Legal Developments – U.S SEC Closure of Ethereum 2.0 Investigation
On 18 June ConsenSys, a blockchain software development company, announced that it had successfully lobbied the United States SEC to classify Ethereum 2.0 (ETH) as a commodity, not a crypto security. Posting on [X ConsenSys said](https://twitter.com/Consensys/status/1803230653120659641 "X ConsenSys said"), “Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0. Thus, the latest  blockchain legal developments indicate that the SEC will not bring charges alleging that the sales of ETH are “securities transactions.”

It further clarified: “The decision follows a letter we sent on June 7, asking the SEC to [confirm that the May ETH ETF approvals](https://www.gate.io/learn/articles/crypto-pulse-11/3339 "confirm that the May ETH ETF approvals"), which were premised on ETH being a commodity, meant the agency would close its Ethereum 2.0 investigation.” Despite approving Ethereum ETFs the SEC had continued to waver its stance on ETH’s status as a commodity rather than a security. As we know, in May the SEC approved the registration of spot Ethereum ETFs.

Read also: [What Happens if the SEC Classifies ETH a Security?](https://www.gate.io/learn/articles/what-happens-if-the-sec-classifies-eth-a-security-wrong-answers-only/2316 "What Happens if the SEC Classifies ETH a Security?")

As of now, the SEC has approved the ETH ETF proposals of several asset management firms, [including Grayscale, Fidelity, BlackRock, VanEck, and ARK Invest](https://www.gate.io/learn/articles/these-are-the-high-profile-spot-bitcoin-etf-applications-currently-in-pllay/1258 "including Grayscale, Fidelity, BlackRock, VanEck, and ARK Invest"). Nonetheless, these firms will not launch their ETFs until the SEC approves their S-1 registration statements.

In April ConsenSys filed litigation against the SEC so it would clarify its position on the status of Ethereum, the second largest cryptocurrency by market capitalization. The goal of [ConsenSys SEC lawsuit was](https://twitter.com/Consensys/status/1783562212667453837 "ConsenSys SEC lawsuit was") to “ensure that Ethereum remains a vibrant and indispensable blockchain platform and to preserve access for the countless developers, market participants, and institutions who have a stake in the world’s second largest blockchain.”

Later on, on 7 June ConsenSys sent a letter to the SEC seeking crypto regulatory clarity on Ethereum’s status, considering that the regulator had already approved the launch of ETH ETFs on the assumption that it is a commodity following its [approval of spot bitcoin ETFs January](https://www.gate.io/blog_detail/3698/spot-bitcoin-etfs-approval-becomes-a-milestone-how-the-crypto-price-will-move-in-the-future "approval of spot bitcoin ETFs January").

Subsequently, ConsenSys stated, through a blog post, that the SEC had indeed confirmed that ETH is a commodity. It [said](https://consensys.io/blog/sec-closes-ethereum-2-0-investigation-will-not-pursue-ethereum-enforcement "said"), “Today, the Enforcement Division of the SEC responded by notifying us that it is closing its investigation into Ethereum 2.0 and will not pursue an enforcement action against Consensys.”

Ethereum 2.0 was a result of the Ethereum proof of stake transition. In fact, the Merge Upgrade transformed the blockchain from the proof-of-work (PoW) consensus mechanism to the proof-of-stake (PoS) one.

## Ethereum's Price Surge and its Performance over the Month
The cryptocurrency market flipped bullish after the SEC confirmed that it will not continue with the Ethereum 2.0 investigation. Such a good piece of crypto news resulted in an Ethereum surge which triggered its price to trade above $3,500. In fact, the crypto market rally influenced the prices of several Ethereum blockchain based cryptocurrencies to rise significantly. Apart from ETH, LIDO and ENS also rallied.

During the 24-hour period that stretched from 18 to 19 June the prices of leading <a href="/uk/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain based tokens that include LIDO, ENS and Maker spiked by large margins. Specifically, the prices of <a href="/uk/price/lido-dao-ldo" target="_blank" class="blog_inner_link">Lido DAO</a>'s governance token (LDO), Maker (MKR) and <a href="/uk/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">Ethereum Name Service</a> (ENS) rose by between 12% and 20%. On the other hand, Pendle, the native cryptocurrency of the yield trading protocol Pendle, was the biggest gainer after registering a 21% price surge.

Despite ETH’s gain on 17 June when its price reached $3,595.95 it has lost much since then. CoinGecko statistics shows that the altcoin has lost by nearly 10% within the last 30 days as the following graph denotes.
![](https://gimg2.gateimg.com/image/article/1719988333image.jpg)
ETH 30-Day Price Chart - CoinGecko

As seen on <a href="/uk/price/the-graph-grt" target="_blank" class="blog_inner_link">The Graph</a>, since 21 June the ETH price has been dropping to the current price, $3,474.44. Based on past and present cryptocurrency trends ETH’s bearish momentum is likely to continue since the last two small candlesticks are red. The series of small red bars at the tip of the graph indicates low ETH volatility and rising bearishness. Generally, the current altcoin performance shows a depressed crypto market.

Read also: [Opportunities in Four Major Sectors of the ETH Ecosystem](https://www.gate.io/learn/articles/opportunities-in-four-major-sectors-of-the-eth-eosystem/3263 "Opportunities in Four Major Sectors of the ETH Ecosystem")

## Comparison of the Stock Performance and Crypto Market Outlook
During the period that the Ethereum blockchain based tokens were performing well, leading U.S listed stocks such as Dow and S&P 500 gained by small margins. When Ethereum spiked by 3% the Dow gained by 0.15% and the S&P 500 by 0.30%.

During the same period [Solana climbed by 8%](https://www.gate.io/post/NewsBTC/status/5451781 "Solana climbed by 8%"), the <a href="/uk/price/polkadot-dot" target="_blank" class="blog_inner_link">Polkadot price</a> jumped by 7% while the Nasdaq Composite remained flat.

## Conclusion 
There was a short-lived crypto rally following ConsenSys’ X's post that the U.S. SEC will no longer continue with its Ethereum 2.0 investigation. In fact, the SEC confirmed that ETH is a commodity, not a security. [LDO](https://www.gate.io/how-to-buy/lido-dao-ldo "LDO"), MKR, and ENS are examples of cryptocurrencies whose prices rose after the news was released. In the meantime, ETH is bearish in line with the general prevailing crypto market sentiment.

<div class="blog-details-info">
<div>Author:* Mashell C.*, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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