Greetings Exclusive Member,
The classification of cryptocurrencies as securities is one of the hottest debates in the digital asset world today. Coinbase’s recent lawsuit against the SEC and FDIC shines a spotlight on this issue, raising important questions about the future of cryptocurrencies like Ethereum.
Why is this so crucial? If Ethereum is classified as a security, it would fall under the SEC’s strict regulations. This could mean more compliance headaches for exchanges and potentially limit how these digital assets are traded. Such a classification impacts not just the operational side of exchanges but also investor protections and market dynamics.
The SEC has accused Coinbase of operating as an unregistered securities exchange and broker, which highlights their firm stance on the matter. On the flip side, Coinbase argues that the SEC’s enforcement approach is unclear and stifles innovation in the industry. This isn’t just a legal squabble; it’s a pivotal battle that could shape the future of the entire crypto ecosystem.
Understanding whether Ethereum and other cryptocurrencies are classified as securities is key to determining the future of crypto regulation. It affects everything from marketing and trading these assets to the protections investors receive.
As this legal drama unfolds, its outcome will likely have significant repercussions for the crypto industry, influencing how digital assets integrate into the broader financial system.
Buckle up, because as we delve deeper into the implications of this classification, we’re witnessing a defining moment in the future of digital finance.
CHARTS
BITCOIN – WEEKLY CHART ANALYSIS
Bitcoin recently experienced a sharp pullback after a promising bounce off the 21 EMA. It nearly reclaimed its all-time highs but got rejected just below the red R1 line at $73.5k. Close, but no cigar!
Last week, Bitcoin found solid support at the 21 EMA, highlighted by the yellow line. A significant wick on the downside showed strong buying pressure from the bulls. This is a crucial zone. To keep our bullish outlook, we need Bitcoin to stay above the yellow 21 EMA. A close below this level on the weekly chart could trigger a wave of selling pressure.
Zooming out, Bitcoin is testing support at the middle of the rising parallel channel.
Keep an eye on the potential double top formation at our previous highs. This pattern often signals a reversal and is worth watching closely.
Additionally, the Stochastic RSI has crossed down again below the 20 level after a fake-out rally, suggesting that momentum is currently on the downside.
Key Levels to Watch:
- R1: $73,509
- S1: $61,173
- S2: $56,939
- S3: $52,819
- S4: $48,577
ETHEREUM – WEEKLY CHART ANALYSIS
Ethereum, much like Bitcoin, recently bounced off the 21 EMA, marked by the yellow line. It rallied just shy of the previous pivot high at the red R2 line at $4,109 before getting rejected and bouncing again off the 21 EMA.
When we zoom out and look at the parallel channel, we see that Ethereum is still in an uptrend, similar to Bitcoin.
For our bullish momentum to continue, we want to see Ethereum hold above the 21 EMA. Should we break below the 21 EMA, we can expect the price to test our support zones at S1 ($2,818) and, if that fails, at S2 ($2,515).
The Stochastic RSI recently crossed down and is now showing early signs of a shark fin pattern, which indicates a potential reversal. Keep an eye out for confirmation of the Stochastic RSI cross.
Key Levels to Watch:
- R1: $3,544
- R2: $4,109
- R3: $4,863
- 21 EMA: $3,200
- S1: $2,818
- S2: $2,515
META – WEEKLY ANALYSIS
Let’s dive into META’s weekly chart and see what’s going on!
Steve gave two trade alerts on META, and both are performing impressively: the first is up roughly 400%, and the second over 80%!
META recently found support at the yellow 21 EMA and has continued its rally from there. Our current resistance is the previous pivot high at $531. Should we manage to break this resistance, META is poised to test the 1.272 FIB extension level at $574.
Keep an eye on the 21 EMA. If META breaks below this level, it will put pressure on our support zones at S1 ($436) and S2 ($384).
The Stochastic RSI is showing that momentum is still on the bull’s side, so things are looking optimistic for now!
Key Levels to Watch:
- Pivot High: $531
- FIB Extension 1.272: $574
- 21 EMA: $470
- S1: $436
- S2: $384
HIGHER LEARNING
WHAT IS A SECURITY?
Understanding the classification of securities is key to navigating the current regulatory landscape. Here’s a concise overview to help you grasp the essentials.
What is a Security?
A security is a financial instrument that holds value and can be traded. It includes stocks, bonds, and options. The SEC uses the Howey Test to determine if something is a security, which considers:
- An investment of money.
- An expectation of profits.
- A common enterprise.
- Profits coming from the efforts of others.
Why Some Cryptocurrencies Could Be Classified as Securities?
Many cryptocurrencies meet the Howey Test criteria:
- Investment of Money: Investors buy cryptocurrencies hoping for profit.
- Expectation of Profits: Many projects promise returns based on their success.
- Common Enterprise: Funds are pooled to develop projects.
- Efforts of Others: Success often depends on the project team’s work.
For example, Initial Coin Offerings (ICOs) often resemble traditional IPOs, where tokens are sold with the promise of future value increases.
Why Some Cryptocurrencies Are Not Classified as Securities?
Some cryptocurrencies don’t meet the Howey Test:
- Decentralization: Bitcoin is decentralized, with no central profit-driving entity.
- Utility Tokens: Tokens used for accessing services within a blockchain, not for investment.
- No Profit Expectation: Tokens without a reasonable profit expectation, valued for use rather than speculation.
Key Takeaways:
Classifying a cryptocurrency as a security subjects it to strict SEC regulations, including registration and compliance requirements. This affects how cryptocurrencies are traded and protected under the law.