Crypto Stays Shaky After SEC Crackdown Led to Weekend Selloff

2023-06-12 13:28

Cryptocurrencies fell Monday, though staying above their weekend lows, as last week’s regulatory crackdown by the US Securities

Cryptocurrencies fell Monday, though staying above their weekend lows, as last week’s regulatory crackdown by the US Securities and Exchange Commission weighed on sentiment.

Bitcoin dropped 1.2% to $25,811 as of 12:20 p.m. in Singapore after tumbling as much as 3.9% to $25,411.64 on Saturday. Solana’s SOL slipped 4.6% after sliding as much as 27% on Saturday. Binance Coin dropped 7% and Cardano’s ADA fell 2.5%.

The SEC launched lawsuits last week against market leaders Binance Holdings Ltd. and Coinbase Global Inc., and flagged a number of altcoins as unregistered securities, including SOL and ADA.

Sentiment remains shaky in the digital asset sector after the recent regulatory clampdowns in the US, spurring market makers to pull out funds and adding to the wild swings amid thin volumes, said Richard Galvin, co-founder at DACM, a Sydney-based hedge fund that invests in digital assets. “There was some bounceback after the overselling on the weekend but markets are extremely fragile.”

An index of the biggest 100 digital tokens declined 0.8%. The total crypto market cap slipped to $1.09 trillion on Monday, according to data from CoinGecko.

“Crypto specific factors are playing the main role given the recent SEC actions,” DACM’s Galvin said. “It seems like there is a resistance on the downside at $1 trillion market cap,” he said.

Regulatory uncertainty over the classification of crypto tokens is adding to investor jitters. While US regulators view Bitcoin as a commodity, SEC Chair Gary Gensler has said most other tokens are subject to the agency’s investor-protection laws and that trading platforms should register with the regulator.

Robinhood Markets Inc.’s decision Friday to drop certain altcoins from its platform just days after the SEC brought enforcement actions against Binance and Coinbase also weighed on sentiment.

“There is some rotation of capital from altcoins into Bitcoin given higher dominance of BTC,” said Stefan von Haenisch, head of sales trading at OSL SG Pte in Singapore. Still, “$26,000 for Bitcoin looks like immediate short-term resistance,” he said.