Cryptos Muted Amidst Federal Shutdown Fears
Cryptocurrencies declined in the past 24 hours amidst fears of a looming federal shutdown. Failure by the Congress to pass necessary funding bills by the end of September is feared to impact government functions. Markets are now speculating not just on the likelihood of a shutdown but also on the expected duration of a potential shutdown.
The U.S. Dollar’s movements also weighed on sentiment. The Dollar Index or DXY, a measure of the U.S. Dollar’s strength against a basket of 6 currencies touched a high of 106.75 earlier in the trade. The DXY has since fallen 0.30 percent overnight to 106.35.
Sentiment remains weak across world markets ahead of CPI updates for September from Europe and PCE-based inflation readings for August from the U.S. Final second-quarter GDP readings from the U.S are also due later in the day.
Overall crypto market capitalization dropped half a percent to $1.06 trillion.
Bitcoin declined 1.1 percent in the past 24 hours dragging year-to-date gains to a little above 59 percent.
Ethereum’s (ETH) overnight losses were lower at half percent amidst unconfirmed reports of SEC fast-tracking its approval for Ethereum Futures ETFs. Amidst weekly gains of 1.75 percent, the highest-ranking alternate coin has gained more than 35 percent in 2023.
Among the top 10 cryptocurrencies, BNB (BNB), XRP (XRP) and Solana (SOL) declined more than 1 percent. Cardano (ADA), Dogecoin (DOGE) and TRON (TRX) recorded overnight losses of less than a percent.
89th ranked Compound (COMP) withstood the turbulence to rise more than 7 percent on an overnight basis.
65th ranked Kava (KAVA) slipped close to 3 percent.
Meanwhile Gary Gensler, Chair of Securities and Exchange Commission on Wednesday, in his testimony before the House Committee on Financial Services, reiterated that the vast majority of crypto tokens likely meet the investment contract test. He added that as most crypto tokens were subject to the securities laws, it followed that most crypto intermediaries had to comply with securities laws as well. The Chair remarked that there was nothing about the crypto asset securities markets that suggested that investors and issuers were less deserving of the protections of the nation’s securities laws. The Chair said that the agency addressed crypto security markets through both enforcement actions and rule-making. He however refrained from commenting on any active litigation.
However, pressure has intensified on the SEC and its Chair Gary Gensler to approve the listing of Spot Bitcoin Exchange Traded Products. In a letter to the Chair, a group of bipartisan lawmakers have urged the SEC to not discriminate against spot Bitcoin ETPs. The letter by Mike Flood, Wiley Nickel, Tom Emmer and Ritchie Torres calls upon the SEC to approve the listing of spot-Bitcoin ETPs immediately. A regulated spot Bitcoin ETP would provide increased protection for investors by making access to Bitcoin safer and more transparent, the letter urges.
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