This week the crypto market has been in decline, with the total market capitalization falling by 4.4% to its lowest point since June 14, reaching $1.02 trillion. This has caused Bitcoin (BTC) to become more dominant in the altcoin market, as regulatory uncertainty persists. Here are three reasons why the crypto market is down this week.
The SEC’s delayed decision on the recently filed BTC and Ether (ETH) exchange-traded funds (ETFs) has dampened investor sentiment. Despite heavy endorsements and applications from the likes of BlackRock and Fidelity, the SEC has yet to approve any ETFs due to concerns over possible market manipulation. VanEck and ARK Invest have officially applied for spot Ether ETFs, with an estimated decision date of May 2024. Nonetheless, the Grayscale Bitcoin Trust (GBTC) discount is still stuck at 20%, as the SEC considers appealing a court decision.
Regulatory uncertainty and lawsuits are also taking their toll on the crypto market. DCG, the operator of GBTC, has financial difficulties, with a subsidiary owing Gemini over $1.2 billion. Moreover, Genesis Global Trading is suing DCG, which is run by Barry Silbert, after experiencing losses due to the collapse of Terra and FTX. Furthermore, the SEC has charged Binance, the biggest crypto exchange, and its CEO Changpeng Zhao, for alleged misleading practices and operating an unregistered exchange. For its part, Ether’s legal status is still unclear, with the SEC yet to confirm the Commodity Futures Trading Commission chair’s designation of it as a commodity.
The crypto market has also been affected by liquidations and low volume. The first week of September saw $37 million in Ethereum leveraged liquidations, and the crypto market’s Total Value Locked (TVL) has dropped from a high of $53 billion in April to $37.7 billion. A strong U.S. dollar, which hit a six-month high on Sept. 7th, has not helped the situation either.
The crypto market’s future will depend on how it navigates these multifaceted challenges. Regulatory developments and economic factors will continue to influence its trajectory in the coming months.