Ethereum (ETH) saw another day of decline on Wednesday as its price dipped outside of a key range. This follows a possible sell-off from institutional whales, the US Dollar Index gaining strength, and the Chair of the US House Financial Services Committee, Patrick McHenry, accusing Securities & Exchange Commission (SEC) Chair Gary Gensler of misleading the US Congress.
Read more: Ethereum dips below key level as Hong Kong ETFs underperform
Ethereum’s classification as either a security or commodity is trending on Wednesday. Here are your key market movers:
As a result the market’s reaction aligns with earlier predictions that a key macro event could have a prevailing impact on the price of Ethereum.
However, Ethereum appears to be quickly recovering losses following the Federal Reserve leaving rates unchanged at 5.25-5.5% on Wednesday. This indicates the Fed hasn’t made tangible progress in tackling inflation.
Also read: SEC Chair “knowingly misled” Congress over Ethereum status, House’s McHenry says
This comes after recent court filings from Consensys revealed the SEC had signed an executive order on April 13, 2023, to subpoena and begin investigating individuals and institutions that have facilitated the buying and selling of Ethereum.
However, Gensler avoided directly answering questions about whether the SEC considers Ethereum a security during testimony to the Financial Services Committee on April 18—only five days after the executive order. As a result, McHenry stipulated that “Gensler himself misled Congress.” He stated that classifying Ethereum as a security “would be yet another example of the arbitrary and capricious nature of the agency’s regulation by enforcement approach to digital assets.”
This new development would prove crucial as investors await the SEC’s decision on a spot Ethereum ETF on May 23 and the Consensys suit of the regulator unfolds.
Ethereum declined again on Wednesday, crashing below the lower level of the $2,852 and $3,300 range. Most traders are gradually exiting positions as Ethereum Open Interest (OI) has declined more than 6% in the past 24 hours.
Also read: Ethereum erases weekend gains as yearlong SEC investigation comes to light
ETH/USDT 4-hour chart
While this may indicate increased bearish sentiment, Ethereum appears to be recovering and is now trading inside the $2,852 to $3,300 key range again.
The recent dip may be an attractive entry point for investors, especially if Ethereum manages to stay above the lower level of the range. Considering the growing strength of the $2,852 to $3,300 range, Ethereum will likely not sustain any downtrend outside it.
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.