The cryptocurrency market has taken a hit in the past 24 hours, as the global market cap has dropped by an estimated 4.5%, down to $1.02 trillion.
Major digital currencies, Bitcoin (BTC) and Ethereum (ETH), both experienced a pullback, with Bitcoin decreasing by 3.87% and Ethereum falling by 5.5%. As of Feb. 10, BTC is trading at around $21,850 and ETH at $1,547.
Investors seem to be reacting to Coinbase’s CEO Brian Armstrong’s tweet. He acknowledged the US Securities and Exchange Commission’s (SEC) plans to ban staking, sparking fear throughout the crypto-sphere.
According to CoinMarketCap, the top-10 crypto assets have experienced a 3.5% decrease on average, with Ethereum and Cardano (ADA) being among the most affected and registering losses of 5-6%.
This trend of crypto markets responding to rumors and speculation is not new, as crypto prices have been extremely volatile over the past several years.
Nevertheless, the SEC’s plans for staking remain a significant uncertainty in the crypto space, and investors will have to wait and see how this narrative will unfold in the coming weeks.
BTC price at January levels
After trading within a narrow range of $21,000 to $22,000, bitcoin surged on Feb. 2 to a 90-day high of $24,167 amid slightly favorable inflation data.
But since then, it’s been a downward spiral for the digital asset, with yesterday’s decline fueled by a tweet from Coinbase’s CEO.
Despite the dip in price, the number of bitcoin transactions per day reached an all-time high on Feb. 9, with data showing a staggering 369,499 transactions – a level not seen since March 2022.
This spike in transaction levels suggests that more individuals are using the network to buy, sell, and transfer bitcoin. Still, with yesterday’s sell-off, investors are becoming fearful of market conditions and cashing out their coins.
While higher transaction levels are typically seen as a positive indicator for the industry, in this case, it’s a red flag, signaling a potential crash in the making.
As the market continues to fluctuate, investors must keep a close eye on the developments and make informed decisions.
Ethereum under radar
It was a tough day for Ethereum as the SEC dealt a blow to the crypto industry by stopping Kraken, a popular cryptocurrency exchange, from offering crypto staking services.
On Feb. 9, Kraken reached a settlement with the SEC, agreeing to pay a massive $30 million for violating securities laws by offering crypto staking services to retail investors in the U.S.
The news sent shockwaves through the crypto world. It caused a sharp drop in the prices of many proof-of-stake (PoS) blockchain project tokens, with Ethereum taking a tough hit.
Ethereum, which switched to a staking-based protocol in September 2022, saw its price plummet nearly 6.5% to around $1,537 on Feb. 9, the most significant single-day decline since Dec. 16 of last year.
The timing of the SEC’s crackdown on crypto staking couldn’t be worse for Ethereum, as the cryptocurrency awaits the release of its crucial network upgrade, Shanghai, in March.
For Ethereum, staking is a critical component of its proof-of-stake (PoS) protocol. Ethereum requires stakers to deposit 32 ETH into its PoS smart contract to be validators. Still, many retail investors turn to third-party staking services like Lido to pool smaller amounts of ETH for validator status.
The SEC’s move to crack down on crypto staking has sparked concerns that if staking is banned for the public, a significant number of Ethereum validators may be forced to move away from the network, which could drastically affect the price of Ethereum.
Altcoins feeling the ‘squeeze’
Due to increased profit-taking, the crypto market has seen a slowdown in its upward momentum, which began in January. However, some projects are still experiencing a rise in prices and demand.
Defying the fragile market conditions, Mina (MINA) has recorded a significant increase, surging more than 11% in the last 24 hours and trading at $0.877 as of Feb. 10. This makes it the biggest gainer among the top 100 cryptocurrencies.
On the other hand, dYdX (DYDX) has suffered the most significant decline, dropping nearly 16% and trading at $2.45 as of Feb. 10.
Yesterday was also a wild ride for AI-based cryptocurrencies. A sudden fall caused a blazing inferno for heavy hitters like The Graph (GRT) and Singularity Net (AGIX). These digital assets had been soaring to new heights recently, but yesterday’s market turbulence made them tumble.
According to data, the overall market cap of AI-based coins experienced a hefty 11% drop, settling at a modest $4.4 billion.
What could happen next?
With recent fluctuations and the SEC’s remarks on PoS coins, the crypto space has become a veritable roller coaster for those seeking to navigate it.
It’s worth noting that the recent frenzy in the market may not have been an actual bull market after all. Instead, it could have been a speculative bubble fueled by hype and a dash of FOMO.
With the SEC cracking down on PoS coins and the possibility of staking being banned, these digital assets’ future remains in the air.
While no one has a crystal ball to predict the future, the current market conditions suggest that we may not yet have hit rock bottom. Before the bull market resumes, investors should prepare for a potential dip as the market adjusts to these regulatory changes.
As always, never invest more than you’re willing to lose.