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Well, good afternoon, everyone. It’s Friday, July 29th. I’m Dave Weisberger, the CEO of Coin Routes. It’s time for this week in Crypto. Well, it sounds like a broken record, but here we are, another week and crypto markets are tracking other risk assets, Nasdaq and Bitcoin are both more or less up 3% over the last seven days.

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In the case of bitcoin, however, on a technical basis, it’s a little bit more interesting. As I talked about last week, 22,000 was sort of the top end of that trading range that had been in for the better part of a month. And at last week it made an attempt to break out only to fall backwards down back into the middle of the range or towards the whatever, anyway, below the top of the range for sure. But this week we’ve seen it rally once again up through that to be flirting with 24,000 and it’s had a few attempts at 24,000 over the last day or so. And I just want to make it clear from a technical perspective what I think is happening.

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Just like I said before, I do think that we have another round of potential bad news coming in the fall, but I don’t see any particular reason why there are bad news out there to trigger another fall in the summer. So my best guess is that bitcoin at least will start floating towards the bottom end of the old trading range, which the bottom of that trading range was 28,000 to 32,000. I would imagine that range will be significant resistance, as the old expression goes, support becomes resistance and vice versa, and I think that’s where we’re at.

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Ether, on the other hand, is a much more interesting picture. So Ether has outperformed bitcoin by over 5% over the last week and it continues to feature conversations about the merge. Ether at flirting with 17,000, I think, it’s ticked as high as 18 over the last few days. It’s really about excitement of its impending transition to proof of stake. Now there’s two cross currents running here that are worth talking about.

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Most of the time, a pretty safe trading strategy is to buy well before and then sell at a news event. That’s perceived to be positive. In crypto, it’s almost predictable, that’s true. In this particular case, however, there’s enough people out there who believe that there are potential difficulties with the merge who potentially have bets that the merge will either be delayed again or there might be problems. That it’s not at all clear that the news itself will represent the top tick. It could very well be that it could spur another round of buying by skeptics who didn’t believe they’d be able to pull it off.

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So I don’t know how to play it. I’m not telling people how. I’m just saying it’s very important to kind of watch because technically and technical traders are most likely to be buying now with the expectation of selling into the merge and that may or may not be the right strategy to take. That said, it’s still creating a lot of interest in crypto and as a risk asset it is certainly trading in line with Nasdaq and other risk assets. But there’s a little bit more fuel to the fire there.

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So let’s talk about our favorite topic: regulation. And once again, out this week, my least favorite regulator, Gary Gensler, chairman of the SEC, has put out a variety of statements and actually this particular propaganda video talking about why enforcement at the SEC is the right way to go. People have interpreted his comments as meaning that: you see! This fall in crypto of about two-thirds is proof that we need to regulate it, ignoring the fact that many of the high flyers on Nasdaq have fallen by the same amount. But that doesn’t matter. There is truth, however, in the notion that disclosure is needed.

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There is truth in the fact that retail people in Voyager and Celsius were harmed, or at least are likely to be. In the case of Celsius, it hasn’t been resolved yet to know how many pennies on the dollar they’re going to get. But the reality is there is a need for something in crypto, but that something is is not SEC style regulation. And that is true because despite his tweets saying if only we had SEC regulation, this wouldn’t happen, the simple fact is his current rule set doesn’t work. A principle-based regulator like the CFTC could work if we cared about safeguarding customer assets, if you cared about disclosures of risk and identifying all potential obvious areas of risk for the customers to make decisions, if you cared about best execution and so on, then a principle based regulator could work.

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The SEC, however, claims that their regulations as securities would do a good job, except for simple facts that he ignores. Number one, it is not possible under SEC regulation to support on-demand settlement or blockchain settlement at all. In fact, it requires third parties and has lots of rules that are very technical when it comes to transfer agents and custodians. Number two, it is not possible to trade a security and a commodity in the same transaction. They have different regulatory regimes.

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Yet on every crypto exchange you could trade ethereum versus bitcoin in one trade and some people will call ethereum a security. And even if the ethereum isn’t a security, all nine of the SEC labeled, all have pairs that could trade those securities, if you believe the SEC definition, against either Ethereum or bitcoin in the same trade, that doesn’t work with their current rules, they need new ones. You also can’t use their ticksized regimes, which would break crypto entirely. Crypto has a much more flexible regime that works for the sizes of their assets and frankly, it’s a whole worthy of a deep dive, but arguably allows people to achieve better trading outcomes.

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You also have true multi-currency in crypto. The same exchange will trade a crypto against dollars, against stable coins, and against Euros, for example. And, oh, by the way, a crypto that’s considered security or a commodity against a stable coin, which he would consider securities, also would become impossible. So there are serious reasons why the rules don’t work. He continues to ignore those reasons. And I will continue to say the only way forward, if you really believe the SEC could have a good set of rules, is to work with the industry to craft new ones.

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And the idea of establishing a safe harbor, which will encourage industry participants to work with the SEC is the only way. Because right now, every single firm that I’ve talked to and I’ve talked to half a dozen who have engaged with the SEC one way or another, feels like doing that engagement hurt them. Because the only outcome was it added to their enforcement case that the SEC brought them or the threats that they made against them. So what’s the answer? Basically, it’s the same thing we’ve said before. We need congressional action on something like the Gillibrand Loomis bill. We need the CFTC to win that fight and not be held hostage by Gary Gensler, who is causing pain. One last note: the notion that the SEC is always a white knight in these sorts of situations is clearly belied by the facts. Consider two of the single biggest problems that have happened in crypto.

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One. The GBTC. $30 billion in AUM going from a premium to a discount, and a discount sufficient enough to bankrupt funds that actually had that trade on, where they were hedged on the other side. That has caused a lot in the crypto contagion, and that is 100% due to the SEC’s high boundness in rejecting all ETFs or all conversion opportunities such as Grayscale. That’s why they’re being sued by it. The second we see what happened with Voyager and other places where there was no regulatory clarity in the United States, for any of these firms to come in and try to act within the rules, without regulatory clarity, they went elsewhere or did other things, and that is also squarely on their shoulders.

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We’ve had a proposal for over three years now in order to try to establish some sense of regulatory clarity. Without it, you will continue to drive things to the shadows. And that’s the point here. The point is we want to bring most crypto regulation towards the light. And that’s kind of what Sam Bankman-Fried always talks about at FTX, larger conversation in terms of what he wants. But the fact is, without regulatory clarity, these things are more likely to happen rather than less. Enough of ranting for one day. Enjoy your weekend, and thank you.