Speaking at the Yahoo All Market summit, SEC’s Director of the Division of Corporation Finance William Hinman said Ethereum is not a security. The market immediately reacted in a positive manner after the announcement. The news was big enough to cause a major trend reversal in the falling market. The total market cap had fallen from $344 Billion to $266 Billion, wiping out $76 Billion in just one week.
As soon as the news of SEC chairman declaring Ethereum is not a security came out, it had an impact in the market which has been falling for a while. Immediately after the announcement, the total market cap jumped from $271.6 Billion to $288.1 Billion, increasing by $16.5 Billion in just one hour.
Though the SEC commissioner had only mentioned Ethereum, at another conference in Atlanta, SEC Commissioner Amy Starr, along with Chairman Jay Clayton answered the ‘Securities or Utility’ question. She said if a Crypto satisfied the Howey Test for investor contracts, it would be declared a security. For utility tokens, she said, “If it’s something that you are buying and are only going to use in an already existing platform, that you are bound to use, then I would say that token is a use token which may not have the characteristics of a security.”
Bitcoin’s price jumped from $6,316 to $6,737 in three hours after Hinman’s speech. While Technical analysis indicated lower levels for Bitcoin in the coming days, this positive news reversed the market momentum and the price of Bitcoin has been stable above $6,500 ever since.
The news had a bigger impact on the price of Ethereum. With the downfall of Bitcoin, Ethereum was also tanking for a week, going below $500 for the first time in two months. The price of Ethereum shot up from $460 to $530, gaining over 15% in just three hours. The price went through a small correction after that and is trading around $500 now. We expect it to remain in this level for the weekend unless there is any significant news.