The crypto market is down today after the news of the SEC suing Binance and its CEO Changpeng Zhao scares off investors.
Right as analysts thought that Bitcoin (BTC) was on the cusp of showing signs of a price breakout, the crypto market took a turn to the downside after the SEC presented charges against Binance exchange. This has led some analysts to believe that the BTC price bottom is not yet in.
Bitcoin price hit a 60-day low on June 5 at $25,744 as traders worry that a larger price dip is possible, noting that Bitcoin price was already struggling with $26,600 resistance before the news of the SEC made headlines.
Similar worries exist for Ether (ETH) which traded above the $2,100 level after the Shapella upgrade only to be followed by a 7-day low of $1,794 on May 24. The downturn comes as Ether gas fees have cooled after the May memecoin frenzy.
Related: Bitcoin is on a collision course with ‘Net Zero’ promises
Concerns over the debt ceiling weigh on risk assets
On June 5, the United States Securities and Exchange Commission led by Chairman Gary Gensler, filed 13 charges against Binance entities and Changpeng “CZ” Zhao. The lawsuit alleges Binance blatantly disregarded United States securities laws, enriching themselves to the tune of billions of dollars.
The lawsuit, which was filed in the District Court for the District of Columbia levied 13 charges against Binance. Further, in the lawsuit, 12 specific cryptocurrencies were listed as securities.
One of the 12 crypto tokens listed was Algorand (ALGO)., a token that in 2019, Gensler called a “great technology” which seems to contradict this latest enforcement action.
Other crypto tokens specifically mentioned include Binance USD (BUSD), Binance Coin (BNB), Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS) and COTI.
Binance posted an official response to the lawsuit on Twitter, shortly after the SEC’s complaint went public.
Our response to the SEC's complaint.https://t.co/mgXxGTKr67
— Binance (@binance) June 5, 2023
The recent SEC action adds to a long history of disputes, misconceptions or mistrust over the actual use case of digital assets. After the FTX implosion, some feel U.S. lawmakers are angry with the crypto industry. The most recent battle is centered on how centralized exchanges can use customer funds.
Lido unlock adds pressure to the crypto market
To date, crypto prices are still highly correlated with the Dow and S&P 500 and most major banks still expect the U.S. to experience a sharp recession at some point in 2023. This has not stopped major stock indices from reaching yearly highs after the United States debt ceiling deal.
The Binance news is widening the gap between equities and Bitcoin.
According to U.S. Bank analysis which incorporates more than 1,000 data points, investor sentiment about the current state of the economy remains low.
According to Terry Sandven, Portfolio Manager, Chief Equity Strategist at U.S. Bank,
“Better-than-expected earnings results, particularly among growth-oriented sectors, have helped push equity prices higher.”
TVL and volume remain low
The total value locked metric (TVL) is a common way to examine the health and sentiment of the crypto markets. According to DeFiLlama, TVL across all protocols dropped 1% in the past 24-hours and shed $116 billion since April 5, 2022.
Related: Google searches for ‘crypto’ fall to 2020 levels as BTC sentiment neutral
In addition to tightening liquidity in the market, exchange inflows are pointing to increased sell-side pressure with an absence of buy-side pressure outside of stablecoins.
With heavy macro headwinds and low volume, it is likely the volatility in crypto will remain for the foreseeable future.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
from Cointelegraph.com News https://ift.tt/cH08eVh
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