Gensler Critiques Crypto Market Dynamics, Calls It Sentiment-Driven

Gary Gensler, former SEC Chairman, critiques the crypto market as primarily sentiment-driven. He argues that it lacks unbiased analytical tools, with only Bitcoin showing potential for long-term success. Following his departure, Paul Atkins has been appointed new SEC chair, sparking both optimism and criticism regarding SEC independence in relation to crypto regulation.

Gary Gensler, former Chairman of the U.S. Securities and Exchange Commission, has expressed ongoing scepticism towards the cryptocurrency market. He argues that this market lacks the necessary tools for unbiased analysis, emphasising that it relies significantly on the sentiments of its participants instead of fundamental values. In an interview with CNBC, Gensler emphasised that the crypto market appears to be largely driven by emotions, with only minimal grounding in concrete fundamentals.

During the interview, Gensler responded to reactions from crypto CEOs after the cessation of certain legal cases regarding crypto asset definitions. He highlighted that cryptocurrencies constitute a relatively small segment of the financial market and suggested that genuine financial assets are typically influenced more by fundamental principles than sentiment. He estimated the crypto market to be primarily driven by emotions—citing it as being perhaps “99%” sentiment-driven, stating that the market mechanics stand in stark contrast to traditional securities.

Interestingly, despite his critical outlook, Gensler acknowledged Bitcoin’s potential for long-term adoption. He noted substantial interest in Bitcoin but also warned that many altcoins could be absorbing sentiments and, thus, are at risk of significant decline. He believes that the reliance on speculation makes these assets less stable compared to Bitcoin.

Following Gensler’s departure on January 20, 2025, Paul Atkins was appointed by President Donald Trump as the new SEC chairman. Atkins has garnered optimism from crypto advocates due to his historically supportive stance on digital currencies. However, he faces criticism from some Senate colleagues, including Senator Elizabeth Warren, who raised concerns about his connections to Wall Street, indicating a possible threat to the SEC’s independence.