SEC Chairman Gary Gensler warned investors to carefully consider the merits of each project after the market experienced extreme volatility following Bitcoin’s climb to a new all-time high.
Gensler made the statements during an interview with Bloomberg on March 6 and compared the volatility of the crypto market to a roller coaster ride.
According to the SEC Chairman:
“[Cryptocurrency] is a highly speculative asset class. You could just look at Bitcoin’s volatility in recent days. And I grew up loving roller coasters… but you as the investing public really need to be aware that this is a bit of a roller coaster ride on volatile assets.”
Expanding on the metaphor, Gensler urged investors to consider the strength of any asset’s fundamentals as it reaches “the top of the market.” [the] hill.” He added that key considerations include cash flows, use cases and each asset’s potential status as a security.
Gensler’s comments come after Bitcoin briefly hit a new all-time high of $69,324 on March 5, before falling 11% to $60,861 within hours, causing a bloody market disruption.
However, the flagship and overall market have recovered most of the losses on March 6, with the flagship crypto trading at $65,834 at the time of writing.
ETH ETFs
When asked to comment on the potential approval of spot Ethereum ETFs, Gensler said the SEC has obtained the documents and is reviewing them. He did not comment on specific applications.
The SEC must decide whether to approve or deny VanEck’s spot Ethereum ETF application before the May 23 deadline, and many expect the regulator to decide on the other applications at the same time.
One Polymarket forecast market puts the approval probability for May at 43%, while several experts, including executives at asset managers, have estimated the approval probability at almost 50%.
Gensler also declined to comment on whether the Ethereum token (ETH) is considered a security and whether this would impact the approval of any pending ETF application. However, he said there are as many as 20,000 crypto tokens, and many of them can be considered securities because investors rely on the efforts of a group of entrepreneurs behind each project.
Gensler is known for his rigid stance on crypto and his view that most tokens are securities that should be regulated by the SEC. Bitcoin remains the only asset he has been confirmed as a commodity by the regulator and his chairman.