Does the US Financial Services Commission's Supervision of the SEC Mean the End of Cryptocurrency Winter?

Last week (6.12-6.18), the market cap  of cryptocurrencies experienced a trend of initial decline and subsequent rise, dropping from $1.05 trillion to a low of $1.02 trillion, a 3% decrease. Afterward, it rose to $1.07 trillion, reversing the decline.

Correspondingly, the market sentiment further panicked, dropping from 49 to 45, and then showing a slight recovery, bouncing back to 46. It can be seen that both market sentiment and total market cap have hit new lows since April 2023. Currently, the market is dominated by bears.

Cryptocurrency market cap, Fear and Greed Index trend from 1/1/2023 to 6/18/2023; Source: MacroMicro.

Last week, mainstream cryptocurrencies had mixed performance with significant divergence. Among them, Binance Coin (BNB) performed the best, increasing by 5.6%, while Ripple (XRP) went from the best performer to the worst, declining by 7.2%.

In addition, Bitcoin (BTC) rose 1.7%, while Ether (ETH) fell 1.3%.

Price performance of major cryptocurrencies from June 12 to June 18, 2023; Source: MacroMicro.

On June 16th, Patrick McHenry, the Chairman of the House Finance Service Committee, announced that they will hold an oversight hearing for the US Securities and Exchange Commission (SEC). The oversight hearing will be divided into two sessions conducted by different subcommittees.

●On June 22 at 21:30, the Oversight and Investigation Subcommittee will hold a hearing on supervising the SEC.

●On June 22 at 22:30, the Capital Markets Subcommittee will hold a hearing on supervising the trading and markets division of the SEC.

To better understand the significance of this supervisory hearing, let's first briefly understand: What is the United States House Financial Services Committee? What is the United States Securities and Exchange Commission? And what powers do they each have?

The Financial Services Committee of the United States House of Representatives is one of the committees in the US House of Representatives responsible for overseeing and regulating legislative and policy-making activities related to the financial services industry, securities markets, insurance industry, and other related areas.

The Securities and Exchange Commission (SEC) is a federal agency responsible for regulating the US securities market, preventing fraud, and safeguarding the interests of investors. Its primary responsibilities include overseeing registered securities firms and exchanges, providing investor education, and protecting investor rights.

Mitrade analyst: From the above, it can be seen that the SEC is regulated and supervised by the House Financial Services Committee, and it cannot do whatever it wants. On June 22nd (this Thursday), the House Financial Services Committee will hold a supervisory hearing on the SEC, which is actually a review of the SEC's actions to determine their legality and reasonableness. If the SEC violates laws and regulations, the House Financial Services Committee has the right to take corresponding measures against it.

In the past two years, the cryptocurrency market has been continuously targeted by heavy-handed actions from the SEC. Among them, Binance Coin (BNB), Ripple (XRP), Filecoin (Fil), and other projects or exchanges have been accused of violating regulations or deemed as securities, which is an established fact. However, it is uncertain whether the House Financial Services Committee's oversight hearing on the SEC is about its attitude and measures towards cryptocurrency.

If the upcoming supervisory hearing is directed at the SEC's cryptocurrency crackdown over the past two years, it will cause significant volatility in the crypto market regardless of the outcome. If the House Financial Services Committee supports the SEC, it will become even more aggressive in cracking down on cryptocurrencies. If they do not support or oppose the SEC's actions, the regulatory environment for cryptocurrencies in the United States will improve, which is favorable for the industry's development. Therefore, investors must closely monitor the hearing on June 22 and be prepared to respond to the volatile market conditions.

On June 14th, Bitcoin fell to $24,800, reaching a new low since April 2023. However, there was a rebound near the end of the day. Over the following two days, BTC continued to rebound, forming two bullish candlesticks and successfully returning to $25,000.

Bitcoin price trend from 2022 to present; Source: TradingView.

Mitrade analyst: Currently, Bitcoin has held its ground at $25,000 and rebounded to around $27,000, which happens to be the upper edge of a downtrend channel. After reaching this level, BTC experienced stagnant growth, indicating that the downward trend has not changed.

Next, we need to observe if BTC can stabilize at $27,000 USD. If so, there is hope for a rebound to $30,000 USD. Otherwise, BTC will continue to fall and may test $25,000 USD again.