The influence of the federal and SEC on the Crypto industry has been tested

The interplay between federal monetary policies and regulatory decisions by the US Securities and Exchange Commission (SEC) continues to shape the cryptocurrency industry. As experts delve deeper into the diversity of these influences, significant changes in both market dynamics and institutional mechanisms are observed.

MicroStrategy's Michael Saylor and BitMEX co-founder Arthur Hayes provide insights into the impact on major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).

Crypto market future predictions from industry titans

Michael Saylor, CEO and founder of MicroStrategy, is a critical summer project for the cryptocurrency sector. According to Saylor, the SEC classifies Ethereum as a security.

Therefore, the Commission may reject Ethereum ETF applications from several asset managers, including BlackRock. These predictions were shared in a speech at the MicroStrategy World 2024 conference.

Saylor expands its forecast to popular cryptocurrencies such as BNB, Solana (SOL), XRP and Cardano (ADA). They, too, suggest that unregistered securities receive similar designations. Saylor asserts that only Bitcoin (BTC) has full institutional acceptance, posing as the “one universal” institutional-level asset.

“None of them will be packaged with a spot ETF, none of them will be accepted by Wall Street,” Salor said.

Read more: Ethereum ETF explained: what it is and how it works

Meanwhile, the market's expectations for the SEC's decision on spot Ethereum ETFs have changed dramatically. Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, said: “On the last day of May, the ETH ETF's confirmation odds fell to 35%.”

Disappointment comes from the givers themselves. In early April, Van Eck, founder and CEO of asset manager Van Eck, shared his doubts about the possibility of the SEC spot approving Ethereum ETFs. His ideas are interesting as his company and 21Shares are among the asset managers eagerly awaiting Ethereum ETF approval later this month.

The situation is becoming more complicated due to ongoing legal conflicts between the SEC and Ethereum-based projects such as Uniswap and Consensys-MetaMask's parent company. BeInCrypto reports that the SEC has issued a Wells Notice to those two companies.

Consensys filed suit against the SEC after receiving the notice. The outcome of the lawsuit will be critical for companies dealing with ETH and related products.

How Federal Policies Affect Crypto Stability and Growth

As the regulatory waters swirl, the broader economic policies of the US Federal Reserve play a critical role in determining the liquidity and viability of cryptocurrencies. BitMEX co-founder Arthur Hayes explores the implications of the Federal Reserve's recent decision to reduce the pace of its balance sheet reduction.

This move effectively injects $35 billion into the economy every month.

Similarly, the Treasury's issuance of additional short-term Treasury bills aims to bolster liquidity. This effort is further influenced by the Federal Deposit Insurance Corporation's (FDIC) efforts to insure depositors after the collapse of Republic First Bank. These activities collectively seek to stabilize the financial environment by adding significant contingent liabilities to the system.

Hayes interprets these actions as easing some of the financial pressure on cryptocurrencies, predicting stability and a gradual increase in Bitcoin's price. He estimated it would be in the $60,000 to $70,000 range by August.

“While I don't expect crypto to fully realize the inflationary nature of recent US monetary announcements, I do expect prices to dip, taper, and slowly rise,” Hayes wrote.

Read more: How to protect yourself from inflation using cryptocurrency

The price of Bitcoin has been falling for the past few days, reaching a low of $56,000. However, at the time of writing, Bitcoin is back. It is now trading at $59,345, which represents an increase of 2.57% in the last 24 hours.

The crypto industry is at a critical juncture in the ever-changing regulatory and financial landscape. Insights from Saylor and Hayes highlight the complex interdependence and potential for both challenges and opportunities. Understanding these dynamics is important for stakeholders looking to navigate the uncertainty of this dynamic market.