It was a rocky weekend for the digital asset space as the price of Bitcoin dipped below $20,000 for the first time since July, according to digital asset data provider CryptoCompare.
The total market cap of the crypto ecosystem followed the flagship assets lead, sliding below the $1 trillion mark. This decline was closely correlated to the conclusion of Fed chair Jerome Powell’s speech – at the 2022 Economic Policy Symposium in Jackson Hole, Wyoming – on Friday.
However, it wasn’t just the digital asset markets that declined over the last week, with the Dow Jones Industrial Average and the S&P 500 falling by 3.03% and 3.37% respectively on Friday. To put the scale of these markets into perspective, this drop equated to the US stock market over one trillion dollars in a single day, more than the entire market cap of the cryptocurrency space.
Ether, the native token of the Ethereum network and the second largest cryptocurrency by market cap also followed this trend, falling from north of $1,700 to $1,450. As of the time of writing, Bitcoin and Ether are trading at $19,859 and $1,449 respectively.
As for the Securities and Exchange Commission (SEC), it delayed yet another spot Bitcoin ETF as the financial regulator maintains its hawkish stance toward digital assets. The SEC rejected the application from New York-based asset management firm, VanEck, which submitted its application on June 24.
This is not the first time that the SEC has delayed a spot Bitcoin ETF application, with VanEck’s previous application also being denied citing concerns surrounding “fraud and manipulation” of the Bitcoin spot market. VanEck is not alone, however, as Grayscale Investments’ application to transition its $10 billion+ Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin ETF has also been rejected.
As of writing, the SEC has rejected or delayed numerous applications for a spot-based Bitcoin ETF. It has, however, approved several Bitcoin futures ETFs. ProShares, VanEck and Valkyrie are among some of the companies that have successfully launched a Bitcoin Futures ETF.
American investors are not alone, with the Australian Treasury now also weighing in on crypto regulation. On Monday, the financial ministerial department stated that it has a comprehensive plan that will establish a regulatory framework for crypto that is better than anywhere else in the world.
Australia will start with “token mapping” work this year, which it says will “help identify how crypto assets and related services should be regulated.” After the preliminaries are done, the Treasury says it will have a “timeline for changes to legislation and regulations.” The Australian Treasury also said it would “soon” release a public consultation paper about token mapping.
Ether open interest peaks ahead of ‘the Merge’
As the digital asset markets continue to grow, it is almost inevitable that more and more crypto investment products will surface. Right now, these products are largely dominated by Bitcoin, but other alternatives are becoming more popular.
Recently, Ether has been trending amongst market participants as momentum surrounding Ethereum’s Merge upgrade continues. As such, the aggregated Open Interest for the ETH/USDT pair reached its yearly high of $2.26bn on August 13th, suggesting that more traders are speculating around the Merge narrative.
We also got an update as to when the Ethereum merge will take place this week, marking the network’s transition from Proof of Work (PoW) to Proof of Stake (PoS). According to a recent blog post by Ethereum Foundation, the upgrade will be completed between September 10th and 20th. Not only does this upgrade change the consensus mechanism of the network, but it also reduces its energy consumption by over 99%, and lays the foundations for future scalability upgrades such as sharding.
Coinbase, Binance and ETHPoW
Last week, popular cryptocurrency exchange Coinbase revealed that it was releasing a liquid staking token similar to Lido DAO token (LIDO). Coinbase’s token, which is called cbETH, represents staked ETH plus all of its accrued interest from staking rewards. The addition of this new token will allow Coinbase customers to transfer, spend, sell, or use their staked ETH whilst it is still locked.
In other news, Binance and Coinbase, two of the largest digital asset exchanges by trading volume, announced that they would not rule out supporting the token of the Ethereum PoW fork. Both exchanges announced they would evaluate the fork post-Merge.
ETHPoW is a term use to refer to Proof of Work Ethereum. If the chain continues to run after the merge has been completed, there is speculation that the new token would be called ETHW, although it remains to be seen if the forked chain will hold any value.
Anyway, in a nostalgic throwback to the 2016/17 era of splits in Bitcoin and Ethereum, it does look set to fuel some interest from market participants.
Jamie Sly is a content creator at CryptoCompare who holds various cryptocurrencies.