SEC Chairman Gary Gensler warned investors to carefully consider the merits of each project after the market experienced extreme volatility following Bitcoin's rise to a new all-time high.
Gensler made the statements during a interview with Bloomberg on March 6 and compared the volatility of the crypto market to a roller coaster ride.
According to the president of the SEC:
“(Cryptocurrency) is a highly speculative asset class. Just look at the volatility of Bitcoin in recent days. And I grew up loving roller coasters… but you should really be aware, as the investing public, that it's 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 key considerations include cash flow, use cases and each asset's potential status as a security.
Gensler's comments come after Bitcoin briefly hit 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 broader market have recovered most of the losses from March 6, with the flagship crypto trading at $65,834 at press time.
ETH ETF
When asked for comment on the possible approval of Ethereum spot ETFs, Gensler said the SEC has the filings before it and is reviewing them. He did not comment on specific applications.
The SEC must decide whether to approve or reject VanEck's Ethereum spot ETF application before the May 23 deadline, and many expect the regulator to issue a decision on the other applications simultaneously.
A Polymarket Prediction Market places the chances of approval in May at 43%, while various experts, including executives at asset management companies, have placed the chances of approval at nearly 50%.
Gensler also declined to comment on whether the Ethereum (ETH) token is considered a security and whether that would impact the approval of each pending ETF application. However, he said there are as many as 20,000 crypto tokens, and many of them could be considered securities because investors rely on the efforts of a group of entrepreneurs behind each project.
Gensler is known for his rigid stance towards crypto and his opinion 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 president.