Altcoin investors are suffering immensely this week, as their favorite assets have lost 2.6 percent of their valuation—all because the SEC refuses to move forward with reviewing spot ETF applications. Cryptocurrency markets took a massive hit on Wednesday, shedding their total market cap because the SEC’s ETF decisions have become significantly hampered.
As for Bitcoin (BTC), it managed to strengthen within the $95,500 resistance zone. For its part, BTC has remained stable above the $95,500 mark, maintaining that psychological threshold for investment. Given everything that has been happening in the market, skeptics are looking toward major altcoins. A clear sign of that was manifested in the spike of trading volumes that were rising.
Further strengthening Bitcoin’s position was the continued buying binge from US corporate investors via Bitcoin ETFs. Data showed yet another significant inflow on Tuesday of $178 million, marking the eighth straight day of positive deposits. It is important to point out that the BlackRock ETFs contributed most of these inflows with substantial deposits eclipsing redemptions from Ark Invest, Fidelity, and Bitwise-managed funds.
The unusual and persistent Bitcoin demand from US corporate investors suggests a strategic attempt to diversify in order to lessen the impact from expected sell-offs in traditional stock markets. This is especially true given the ongoing US trade war with China, along with American firms missing expected earnings.
Altcoins Dump: XRP, Dogecoin, and Avalanche Suffer Losses
In stark contrast to Bitcoin’s relative stability, top altcoins pending spot ETF applications experienced a coordinated sell-off due to the SEC’s decision to push back their review. Bloomberg’s Chief ETF Analyst Eric Balchunas confirmed that the pause for the spot XRP ETF was procedural, but information from the market indicated a jittery response from short-term traders.
XRP, Dogecoin, and Avalanche have faced almost identical losses in the past 24 hours, according to CoinGecko data. XRP, which saw a rally to $2.30, retraced by 4.4% and was at $2.18 at press time, showing again the correlation between its price action and the ETF verdict delay. Similarly, Dogecoin traded at $0.1714 after losing 3.5%; however, the cryptocurrency witnessed a 7.0% gain over the week, indicating that the recent trigger must have happened not long ago. On the other hand, Avalanche (AVAX) slipped 3.9% as it was attempting to stay above the $18 mark.
Mid-Cap Gains: Sui and Pudgy Penguins Buck the Trend
Amid struggles for most major altcoins, some mid-caps, especially in DeFi and NFTs, went against the tide and received greater capital inflows. As Sui (SUI) came into focus, it initially surged 20% to $3.70 before pulling back, marking a standout performance in the market. From DeFi data on DeFillma, the blockchain’s DeFi Total Value Locked also saw a significant increase of 15.8%, fueling this surge. Also notable was Pudgy Penguins (PENGU), a growing NFT brand, which also featured amongst the top trending assets as it rallied 47.5% to $0.0094. Increasing engagement metrics and new merchandise releases combined with a broad surge of interest from the global NFT and Web3 communities, as well as within and outside the NFTs, strongly propelled this surge.
Regulatory Landscape: PayPal’s PYUSD Cleared, Canada’s Crypto Skeptic
In another piece of crypto news, the SEC decided not to take any enforcement action regarding its investigation into PayPal’s PYUSD stablecoin, signaling a clear adoption path for the stablecoin. The election of Mark Carney as Canada’s prime minister, beating a prominent supporter of cryptocurrency, also raised some eyebrows. This puts Carney’s cryptocurrency regulations, which he has previously expressed concern about, in Canada under skepticism.
Conclusion: An Industry Facing Regulatory Gaps
The cryptocurrency market is under the impact of regulation as well as overarching sentiment within the industry. The SEC’s altcoin ETF review postponement has led to an ephemeral capital migration toward Bitcoin and Ethereum. This phenomenon occurs concurrently as mid-cap DeFi and NFT projects showcase signs of robust growth. Stalemate developments regarding stablecoin regulations alongside political shifts within important domestic geographies add tension to the overall shifting scope of digital assets.
