Crypto week: Ethereum suffers another week of losses and XRP rises from the ashes
Ethereum is down 19% since the Merger, while XRP soars on news that the lawsuit between the SEC and Ripple could come to a conclusion soon
The prices of market-leading cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), fell on Wednesday (21) after news that the US Federal Reserve was raising interest rates by another 75 basis points to contain the effects of inflation.
In June, when the Fed raised interest rates for the first time by 75 basis points this year, many commented that the hike was the sharpest rise by the US Federal Reserve since 1994.
In July, the Fed announced another 0.75% increase. Bitcoin and Ethereum prices jumped within an hour of the announcement.
This is not typical market behavior, as rising interest rates make borrowing more expensive, which in turn means investors are more likely to ditch their risky assets.
In any case, none of the major cryptocurrencies held their ground this time around. Bitcoin is down 3.4% over the past seven days, according to CoinGecko, and is currently trading at $19,100, while Ethereum is down 6.2% on the week to its current $1,340.
Several other industry-leading cryptocurrencies posted double-digit percentage losses this week, including COSMOS, down 12% to $14.39. Ethereum Classic (ETC) is down 15% to $28.74 and Near Protocol (NEAR) is down 10.5% to $3.79.
The week's valuations
Some names escaped the contagion and managed to post double-digit percentage gains over the week: Stellar (XLM) exploded 16% to $0.12, Cronos rose 16% to $0.11, and Algorand (ALGO) soared 38%, to US$0.40.
But the biggest rise was for XRP, which took off 43% over the week to $0.52. The pump followed news earlier in the week that Ripple and the U.S. Securities and Exchange Commission (SEC) filed motions for summary judgment in the $1.3 billion lawsuit, each maneuvering to shelve the lawsuit before judgment.
1. The week after the merger
Of course, ETH was already down before the Fed's inflation news this week.
Data from Glassnode showed that predictions that the Ethereum Merge would be a case of “buy the rumor and sell the news” were confirmed. "It's not surprising that profits were made when they were available," Glassnode wrote on Monday. “Finance rates have since returned completely to neutral [after falling to an all-time low of -1,200% in the run-up to the Merger], suggesting that much of the short-term speculative premium has dissipated.”
Glassnode had reported in August that there was overwhelming demand to buy premium ETH options, calling it an “extreme bullish bias state” for the asset price in September.
However, the same report noted that the implied volatility of ETH was higher in bearish price predictions than in bullish ones, indicating that traders were “paying a premium for the protection of post-Merger put options”.
Ethereum
Miners were making a lot of money in the run-up to the Merger. According to OKLink, which pulls data from a dozen different mining pools, including F2Pool, Binance, and BTC.com, miners sold a total of 14,785 ETH, totaling $19.73 million in transactions from Sept. Merger Day on September 15th.
The biggest sale took place on September 14, when miners unloaded nearly 8,032 ETH onto the market.
2 . Regulators vs Ethereum
In a federal lawsuit against a cryptocurrency influencer filed on Monday, the SEC suggested that it believes the US government has jurisdiction over all Ethereum transactions.
Pursuant to a ruling in paragraph 69 of the lawsuit, the SEC claims it can sue Ian Balina not only because his case concerns transactions made in the United States, but also because the fact that the majority of validators on the Ethereum network are in the US means that the entire blockchain is under the purview of the government – or so the SEC argues.
Gary Gensler, the chairman of the SEC, has previously said that Bitcoin is a commodity, but his silence on Ethereum makes many suspicious that he doesn't think the asset doesn't have the same rating as BTC.
Last week, Gensler said that cryptocurrencies based on proof-of-stake (PoS) consensus, which allow holders to passively earn returns through staking, can be classified as securities: “From a currency perspective… indication that under the SEC's "Howey test" the investing public is anticipating profits based on the efforts of others."
3. MicroStrategy buys more Bitcoin
MicroStrategy is no less bullish on bitcoin in its post-Saylor era: on Monday, the software company added another 300 BTC, at the time worth about $6 million, to its treasury.
MicroStrategy was already the world's largest corporate HODLer, but the additional bitcoin now means the company has 130,000 BTC in cash, or about $2.4 billion at its current price.
MicroStrategy shares dropped 6% early on Monday when buying more bitcoin surfaced, but rebounded the next day.
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