SEC chair Gary Gensler cautioned investors to carefully consider the merits of each project after the market experienced extreme volatility following Bitcoin’s ascent to a new all-time high.
Gensler made the statements during an interview with Bloomberg on March 6 and likened the crypto market’s volatility to a roller coaster ride.
According to the SEC chair:
“[Cryptocurrency] is a highly speculative asset class. One could just look at the volatility of Bitcoin in the last few days. And I grew up loving roller coasters … but you really should be conscious, as the investing public, that this is a bit of a roller coaster ride on volatile assets.”
Continuing the metaphor, Gensler urged investors to consider the strength of each asset’s foundation as it reaches “the top of [the] hill.” He added that essential considerations include cash flows, use cases, and each asset’s potential status as a security.
Gensler’s comments come after Bitcoin briefly touched a new all-time high price of $69,324 on March 5 before falling 11% to $60,861 within hours, causing a bloody market rout.
However, the flagship asset and the overall market recovered most of the losses on March 6, with the flagship crypto trading at $65,834 as of press time.
ETH ETFs
When pressed to comment on the possible approval of spot Ethereum ETFs, Gensler said that the SEC has the filings before it and is reviewing them. He did not comment on specific applications.
The SEC has to decide whether to approve or reject VanEck’s spot Ethereum ETF application by the May 23 deadline, and many expect the regulator will simultaneously issue a decision regarding the other applications.
One Polymarket prediction market places May approval odds at 43%, while various experts, including executives at asset management firms, have placed approval odds close to 50%.
Gensler also declined to comment on whether the Ethereum token (ETH) is considered a security and if this would impact the approval of each pending ETF application. However, he said there are up to 20,000 crypto tokens, and many of them could be deemed securities because investors rely on the efforts of a group of entrepreneurs behind each project.
Gensler is known for his rigid stance toward crypto and his view that most tokens are securities that should be regulated by the SEC. Bitcoin remains the only asset he has confirmed as a commodity by the regulator and its chair.