Bitcoin’s volatility drops and cycles grow as Consensys sues SEC
DATA from CryptoCompare shows that Bitcoin's price dropped by nearly 4% over the past week as spot Bitcoin exchange-traded funds (ETFs) in the United States record outflows shortly after the cryptocurrency’s highly-anticipated halving event. Bitcoin is now trading at $62,300.
Ethereum’s Ether, the second-largest cryptocurrency by market capitalisation, bucked the trend and rose around 0.8% over the past week, seeing an initial decline to around $3,075 before recovering to now trade at $3,175.
Headlines in the cryptocurrency space over the week reveal that after a short-lived halving frenzy that Bitcoin’s saw transaction fees surge to as much as $170, transacting on the cryptocurrency’s network quickly became affordable again, with medium-priority transaction fees quickly dropping to $8.48. The average transaction fee is now below $7.
Bitcoin, despite its ongoing correction following a significant rally, has exhibited a surprising lack of panic, as option market’s haven’t yet seen a surge in demand for downside protection, unlike traditional markets. Deribit’s BTC VOL index, an options-based expected volatility gauge, even dropped during the downturn. The index dropped from over 75 earlier this month to now stand at 55.6.
While Bitcoin's volatility indicators may be subdued, this doesn't necessarily imply true stability as historically, Bitcoin's implied volatility has moved in tandem with its price. Price increases often coincide with rising volatility, and vice versa.
The launch of spot Bitcoin ETFs in the Us shook supply dynamics for the world’s leading cryptocurrency, as these funds have since launch collected over $750 million worth of BTC, effectively accumulating more than 4.25% of all circulating Bitcoin, according to CCData’s latest blog.
That same blog post details that historical price cycles following Bitcoin halving events have lengthened over time, with the cycle in 2012 being of 1,319 days, and the 2016 cycle being of 1,402 days. That figure rose to 1,440 days in the 2020 cycle, which would suggested that the 2024/2025 period is going to see further growth with data further showing that the time from halving to price peak appearing to lengthen after every cycle, going from 366 days in 2021 to 548 days in 2020.
Despite the turbulence some are still betting on crypto, with Pantera Capital now aiming to raise over $1 billion for a new fund that would offer investors exposure to various blockchain-related assets. The fund, dubbed Pantera Fund V, will be available to qualified investors looking to put in at least $1 million.
Consensys sues SEC over Ethereum classification
Ethereum software developer Consensys has sued the US Securities and Exchange Commission (SEC) last week, challenging the regulator’s authority over the second-largest cryptocurrency by market capitalisation Ethereum.
The lawsuit, filed in the United States District Court for the Northern District of Texas, argues the regulator attempted an “unlawful seizure of authority” over ETH and is seeking a court decision to clarify the cryptocurrency’s classification.
The firm contends its cryptocurrency wallet MetaMask is “simply an interface” that "neither holds customers' digital assets nor carries out any transaction functions," thus not functioning as a broker under federal securities law.
Consensys criticized the SEC's inconsistency, pointing to past statements, like former Director Hinman's classification of ETH as a commodity in a speech in 2018, and the Commodity Futures Trading Commission’s existing oversight of ETH derivatives. The firm argued it “built its business against the backdrop of this regulatory consensus”.
Over the week, a new filing with the US District Court for the Southern District of New York revealed the US requested Terraform Labs and its co-founder Do Kwon pay roughly $4.7 billion in disgorgement and prejudgment interest, along with $520 million in civil penalties – $420 million from Terraform Labs and $100 million from Kwon himself.
Meanwhile, the US Department of Justice (DOJ) and lawyers for ChangpengZhao, the founder and former CEO of leading cryptocurrency exchange Binance, presented starkly contrasting sentencing recommendations in filings over the past week, with the DOJ seeking a three year sentence for Zhao.
This week also saw the DOJ announce charge against the founders of Samourai Wallet for their alleged involvement in a large-scale money laundering operation that is claimed to have facilitated over $100 million in transactions associated with illegal activity on the dark web.
On top of all this, this past week saw El Salvador’s national Bitcoin wallet, Chivo, suffer a security breach that saw a hacking group leak snippets of its source code and virtual prive network access on a hacking forum.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
