Ethereum Steadies after Last Week’s Drop as US Regulators Target Staking
ETH/USD Analysis
Crypto exchange firm Kraken agreed to shut down its staking-as-a-service program on Thursday and pay a $30 million fine, in a settlement with the US Securities and Exchange Commission (SEC) [1]. Staking is a process in which investors commit their cryptocurrencies to validate transaction in the blockcain, earning returns. The SEC considers crypto staking and lending as securities and according to Chair Gary Gensler, crypto firms "need to provide the proper disclosures and safeguards required by our securities laws".
The decision can have broader ramification for the entire industry, but disagreements arose, as commissioner Hester Peirce made public her dissent against the decision. She argued that such registration may not be that easy, adding that "using enforcement actions" to say what the law is, "is not an efficient or fair way of regulating". [2]
The CEO of rival exchange Coinbase Brian Armstong, spoke of "regulation by enforcement" that does not work, noting that a ban of staking in the US would be a "terrible path", which would thwart an important innovation. [3]
Continued regulation headwinds weighed on cryptocurrencies last week, with the CryptoMajor basket and Ethereum, both losing more than 8%. The rise of the USDollar also had a negative impact, caused by the repricing in expectations around the Fed's policy path, with markets now embracing a higher 5.25% terminal rate.
ETH/USD dropped on Thursday after the Kraken news and tests the EMA200 and the 38.2% Fibonacci of the December low/ February high rebound. Daily closes below this critical support area, would expose it to the 50% Fibonacci and the daily Ichimoku Cloud (1380-65), but further decline that would challenge 1,148 have a higher degree of difficulty.
Despite last week's slump, ETH/USD is upbeat today, trying to hold above the aforementioned key support confluence. As long as defends it, the altcoin is in the driver's seat and can set higher highs (1,717), but we are cautious at this stage for further advance that would threaten 2,015.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 12 Feb 2023 https://www.sec.gov/news/press-release/2023-25 | |
| Retrieved 12 Feb 2023 https://www.sec.gov/news/statement/peirce-statement-kraken-020923 | |
| Retrieved 07 Jun 2023 https://twitter.com/brian_armstrong/status/1623459318476726272 |
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