Crypto Markets Dip Lower On Regulators’ Comments

Bitcoin and Ethereum continued their downtrend on Tuesday, as SEC Chairman Gary Gensler and Comptroller Office Chief Michael Hsu expressed concerns about the asset class.

Crypto markets feel the pain

Crypto markets continue to decline, boosted by a bearish regulatory outlook.

Bitcoin briefly dipped below $ 40,000 on Tuesday night, testing crucial psychological support. Over the past seven days, bitcoin has fallen more than 12% but has since rallied slightly, trading at around $ 42,200.

Ethereum did not do any better, registering a 15% drop over the past week. The second largest cryptocurrency briefly hit a low of $ 2,654 before seeing a strong rally. The price appears to have stabilized and is currently trading at around $ 2,930.

The current bearish sentiment in the markets was boosted yesterday by comments from SEC Chairman Gary Gensler. In an interview with the Washington Post, Gensler firmly expressed his belief that many crypto assets should be classified as securities, thus falling under the purview of the SEC.

Commenting on the current lack of regulation for crypto assets, Gensler said:

“I’m really worried that we will continue to port these application cases, but there is going to be a problem on the trading and lending platforms, and frankly when that happens a lot of people are going to be hurt.”

Elsewhere, Michael Hsu, the acting head of the Office of the Comptroller, also expressed negative views on the crypto industry during a webcast with the Blockchain Association. Hsu issued a strong warning to auditors, comparing decentralized finance in the crypto industry to the practices that triggered the 2008 financial crisis. “Crypto / DeFi is now on a path that resembles CDS in the early years. 2000, “he said.

While bearish news dominated the first half of the week, there appears to be a light on the horizon for the crypto markets. Evergrande, the Chinese real estate developer whose debt crisis has spread to financial markets, appears to have struck a deal with the People’s Bank of China to repay interest on its loans, allaying fears of a company default.

Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.