If you’ve been following the cryptocurrency world, you’ve probably heard the news: Bitcoin has dropped over 12.5% and other cryptocurrencies are down over 16% in the last 24 hours. You’ve probably also heard that SEC chair Gary Gensler likens crypto crash to the Wild West. Perhaps you’ve even heard that Mark Cuban, the billionaire investor, is a crypto evangelist. In this article, we’ll look at a few of the warning signs.
Bitcoin is down over 12.5%
The crypto market has been struggling over the past couple of months, with prices plummeting nearly 40% in June alone. This fall in value comes amid a wider range of issues, from rising inflation to geopolitical tensions to the possibility of tighter monetary policy from the U.S. Federal Reserve. As more global economic factors are tied to cryptocurrencies, volatility is likely to remain high. While this may seem like a bearish omen for bitcoin and other cryptocurrencies, the market has largely tracked the stock market in recent months. Inflation, war, and shifting monetary policy have not slowed, and will likely continue to do so.
With the price of bitcoin declining, many financial advisers are now considering a sell-off. Hunter Horsley, the chief executive of Bitwise Asset Management, which offers crypto investing advice to 1,000 financial advisors, met with about 70 advisers this week. While some weren’t selling because other assets were down, others were hoping to capitalize on the dip. Still, the price plunge has rattled crypto traders. As of today, the cryptocurrency market has been down about six-and-a-half percent from its peak in November 2021. However, previous bear markets have seen prices drop up to eighty percent.
Other cryptocurrencies are down as much as 16% in the past 24 hours
Bitcoin is down 12% in the past 24 hours, with other cryptocurrencies following suit. Bitcoin was the largest cryptocurrency by market cap before the collapse but is now down 16%. Other cryptocurrencies have suffered more substantial drops, including Cardano, Ether, Shiba Inu, and XRP, which are down more than 16 percent. However, it is unclear whether these falls will be a long-term trend.
Cryptocurrencies have been undergoing a rough patch since the beginning of May, when they plunged almost 20%. Bitcoin fell to under $26,000 in early May, before gradually recovering. However, investors have been grappling with a host of other problems, including rising inflation, geopolitical crises, and tighter monetary policy from the Federal Reserve. As the crypto market grows more mainstream, it is becoming more closely linked to the stock market and other factors that affect the global economy.
SEC Chair Gary Gensler compares crypto to the Wild West
SEC Chair Gary Gensler recently compared the crypto industry to the Wild West, stating that regulation is the best way to protect investors. While Gensler has good knowledge of Bitcoin and the blockchain, he has been a skeptic of cryptocurrency regulation. This speech was a major setback for cryptocurrency enthusiasts. While Gensler is a former MIT professor, he has a thorough understanding of the industry.
According to Gensler, many cryptocurrencies operate like securities but are not registered with the SEC. Even crypto exchanges are not registered, so they would need to be regulated like stockbrokers. He also said that the SEC has always been clear on the issue of securities. In the 1930s, Congress set up various investments that qualify as securities. One of those investments is an investment contract. The Howey Test defines an investment contract as an “investment in a common enterprise.”
Mark Cuban is a crypto evangelist
Billionaire tech entrepreneur and Dallas Mavericks owner, Mark Cuban, is a vocal crypto evangelist and investor. He has stakes in almost two dozen blockchain and crypto companies. While the two most popular digital tokens, bitcoin and ethereum, saw modest gains over the past 24 hours, they remain near their lows of the past two years. Despite his adamant crypto stance, Cuban is clearly still bullish on the market.
Although Mark Cuban was critical of Bitcoin, he now touts the digital asset as an alternative to gold. He even has an entire portfolio dedicated to it, and his majority of funds are invested in bitcoin. The billionaire also recommends Ethereum, a platform that features smart contracts. In fact, Cuban is an early adopter of blockchain technology. His comments, despite the recent decline in bitcoin’s value, are likely to have a positive effect on cryptocurrency adoption.