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WLFI token falls 40% despite 47M burn, whales face heavy losses.
Wintermute asks the SEC to exclude network tokens from securities laws.
Ethereum outperforms Bitcoin as ETF inflows and treasuries boost demand.
Today, the cryptocurrency market has seen significant developments, with regulatory changes, token losses, and the flow of capital influencing trading. Wintermute addressed regulators about token classification, whales made losses on WLFI, and Ethereum had high institutional demand.
Crypto trading firm Wintermute has asked the United States Securities and Exchange Commission (SEC) to confirm that network tokens should not be classified as securities. The company submitted its request in formal feedback to the agency’s ongoing review of digital asset regulation.
According to Wintermute, network tokens, including Bitcoin (BTC) and Ethereum (ETH), act as the fundamental elements of decentralized networks and not financial products. The company cautioned that classifying them as securities will create regulatory burdens, decrease liquidity, raise the costs of trading, and drive innovation offshore.
The company compared network tokens to commodities and collectibles, noting that these can be purchased for investment purposes without being treated as securities. Wintermute welcomed the SEC’s moves to provide clarity on stablecoins, memecoins, and staking activities, but stressed the same clarity should extend to network tokens. The firm said this would preserve US competitiveness while supporting constructive dialogue with regulators.
Wintermute also urged the SEC to ensure decentralized finance (DeFi) can grow alongside centralized tokenized securities markets. The company said encouraging both ecosystems would promote innovation and give investors broader options.
The World Liberty Financial (WLFI) token, which has links to the Trump family, recorded heavy losses this week. Blockchain data shows the token dropped more than 40% since its Monday launch, despite a supply reduction effort through a 47 million token burn.
Whales, or large crypto investors, lost millions of dollars as WLFI fell sharply. One whale wallet closed a leveraged long position with a $1.6 million loss, just hours after taking profits from a previous trade. Other large holders also reported significant losses. One wallet was down more than $650,000 on a $2 million position, while another trader lost over $2.2 million on a long bet.
Not all traders lost money. Some profited from short positions that benefited from WLFI’s price decline. However, sentiment around the token turned negative. CoinMarketCap data showed WLFI became the ninth-most-bearish token among the top 100 cryptocurrencies by investor sentiment, with nearly one-third of users expressing pessimism.
Although an attempt was made to stabilize the price, even with the token burn, trust in WLFI weakened as whale investors minimized their exposure. The decline highlighted the risks of speculative buying in newly launched tokens.
Midweek trading saw Ethereum (ETH) performing better than Bitcoin (BTC) due to inflows into spot exchange-traded funds (ETFs) and an increasing use by digital asset treasuries. Ethereum price increased by almost 4% to $4,456, and Bitcoin price gained by only 0.56% to $111,683.
Analysts explained Ethereum's outperformance as a result of a complex of factors such as the ongoing inflows of ETFs, tightening of supply due to staking, and demand by corporate treasuries. According to recent data, capital flow out of Bitcoin to Ethereum occurred due to investors seeking to capitalize on opportunities after Bitcoin’s July and August rally.
Digital asset treasuries have become a significant market force this year. Several firms, including Bitmine, SharpLink Gaming, Bit Digital, and BTCS, now collectively hold around 2.7 million ETH, valued at more than $12 billion. These purchases added to buying pressure and helped Ethereum maintain higher price levels with less volatility than Bitcoin.
Traders also remain focused on macroeconomic developments. The US Federal Reserve’s next policy meeting in mid-September, preceded by Friday’s nonfarm payroll data release, is expected to shape market sentiment. Analysts said employment data could influence expectations on interest rate cuts and, in turn, crypto market movements.
