Crypto markets have recently experienced a significant impact following the SEC’s lawsuits against Coinbase and Binance, with some tokens suffering more than others. The total market capitalization for cryptocurrencies has only shrunk by 2.5%; however, the 18 tokens (excluding BUSD) listed as crypto securities in the SEC’s documents have dropped by over 11% on average. Meanwhile, Bitcoin (BTC) and ether (ETH), which were not included in the court filings, are down by just 2% each as of 9 am ET.
The lawsuits have caused an extreme selloff, with long liquidations reaching almost $300 million – a 2023 daily record. The market has managed to recover and even erase Binance-associated losses almost completely; however, certain tokens are still struggling. Among them, The Sandbox (SAND), Algorand (ALGO), Cardano (ADA), Binance Coin (BNB), Filecoin (FIL), Polygon (MATIC), Chiliz (CHZ), Cosmos (ATOM), and Internet Computer (ICP) have all lost between 10% and 18% in value since the SEC lawsuits were first announced. Approximately $11 billion was wiped from their market caps, accounting for around 25% of the crypto market losses since the Binance suit.
Despite the losses, industry insiders have expressed skepticism about the SEC’s reasoning for the lawsuits, with claims that the provided evidence is reliant on technical misunderstandings and lacks proper context. Nevertheless, SEC chair Gensler has defended the actions, insisting that crypto startups know exactly how to register but don’t want to.
As cryptocurrency markets experience these fluctuations, implied volatility for Bitcoin and Ether remains at historically low levels. BitOoda’s head of trading, Mike Tauckus, commented that this low volatility may persist until the market can make a sustained push through one end of the narrowing range. Conscientious traders can take advantage of the current low liquidity and market complacency to profit from low risk/high reward scenarios.
In conclusion, the recent SEC lawsuits have had a substantial impact on specific cryptocurrencies, particularly those listed as securities in the court documents. While the market’s reaction has been sharp, it remains to be seen whether there’s genuine reasoning behind the SEC’s claims or if the agency is leveraging technical misunderstandings. For now, traders should remain aware of these market fluctuations and tread cautiously when dealing with affected tokens.
Source: Blockworks
