As a result of the United States Securities and Exchange Commission (SEC) prohibiting Kraken, a cryptocurrency exchange, from providing crypto staking services, Ethereum’s native token, Ether, saw its worst day performance of the year.
The SEC accused Kraken of violating securities laws by providing cryptocurrency staking services to American retail investors, and on February 9 Kraken agreed to pay $30 million to resolve the matter.
The announcement in particular caused numerous proof-of-stake (PoS) blockchain project coins to lose value. Ethereum, which adopted a staking-based architecture in September 2022, had problems as well.
The price of ETH fell the most in a single day since December 16 of last year on February 9, falling roughly 6.5% to about $1,525.
Will Ethereum staking endure SEC enforcement actions?
While Ethereum waits for the March release of its crucial network update, called Shanghai, the SEC starts to tighten down on cryptocurrency staking.
With the upgrade, entities that have about $25.6 billion worth of ETH tokens trapped in Ethereum’s PoS smart contract will now be able to withdraw their funds together with yield rewards. As a result, many experts, like Matt Hougan, chief investment officer at Bitwise Asset Management, saw Shanghai as a positive development for ether.
However, concerns have been raised regarding the future of cryptocurrency staking in the United States. Brian Armstrong, the CEO of the cryptocurrency exchange Coinbase, worries that the SEC may eventually outlaw staking for ordinary investors.
Furthermore, some analysts argue that preventing the usage of Ether-staking services may drive people away from Ethereum.
Notably, Ethereum’s PoS smart contract needs stakes to deposit 32 ETH (about $50,000) in order to become a validator. Therefore, to enable validator status, individual investors frequently employ third-party staking platforms that pool lesser amounts of ETH.
Bearish rejection is seen in the ETH price.
Technically speaking, the price of ether is set up for a possible 20% price correction in February.
Notably, the price of Ethereum has been experiencing a fall after hitting the barrier of its multimonth descending trendline on the daily chart. It currently has support at $1,525 from the 200-day exponential moving average (200-day EMA; the blue wave).
Ether has a chance of falling below the 200-day EMA support wave because of its unfavorable market dynamics. Such a situation places the subsequent downside objective around $1,200, which also happens to be a support for an ascending multimonth trendline.
