by
Font size
Bitcoin has fallen since the SEC announced charges against crypto exchange Binance.
Dream time
Bitcoin
and other cryptocurrencies continued to tumble Tuesday amid market panic over allegations by the US Securities and Exchange Commission against Binance and
Coin base
Global, two of the world’s largest crypto exchanges.
Bitcoin’s price fell 5% in the past 24 hours to $25,500. Bitcoin was trading near $28,000 on points Monday before the SEC announced it was suing Binance, Binance.US and their founder with a litany of securities violations, and settled about $25,750 before the regulator hit Coinbase with securities charges on Monday.
The largest digital asset has fallen below the trading range between $26,000 and $27,000 that has stabilized prices over the past month, with April’s peak above $30,000 – the highest level since June 2022 – now well out.
“The sharp decline has pushed Bitcoin’s price below its 200-week average,” said Alex Kuptsikevich, an analyst at broker FxPro. “We should be prepared for a big sell-off to $22,000,” he added, which would be another 15% from current levels.
Binance is by far the world’s largest digital asset trading platform and represents a pillar of the crypto universe whose continued operations and financial health are vital to prices, at least in the short term. Probably the biggest immediate risk is that the fear of Binance creates the crypto equivalent of a run on the bank, which could threaten the operations of this systemically important player.
One of the SEC’s most disturbing allegations was that Binance exercises control over assets held on its platform, “allowing them to commingle client assets or divert client assets as they see fit, including to any entity owned by Zhao.” This is especially shocking since the alleged mixing of client money between FTX and an affiliated hedge fund, Alameda Research, both overseen by Sam Bankman-Fried, was integral to that crypto exchange’s collapse last November.
So far, there are signs that some traders may be taking money from Binance, with the exchange seeing nearly $780 million in net outflows in the past 24 hours as of early Tuesday. according to crypto intelligence group Nansen. While that’s a significant drop, the stock market has faced bigger tests before, including last December when outflows exceeded $3 billion a day.
More broadly, as fears for Binance continue to ripple across the markets, exacerbated by the charges against Coinbase, some investors are seeing the benefit of the SEC’s actions – horrendous as they now look – which will ultimately bring some much-needed clarity on the regulation in the crypto landscape. .
“Historically, whenever regulators stepped in to clean up crypto, it ended up being a good thing for the industry,” said Matt Hougan, the chief investment officer at Bitwise Asset Management, a major provider of crypto index funds.
“Regulators have not been perfect by any means. Many of these “clean-ups” came too late and were applied arbitrarily, aimed at punishing rather than protecting investors. But the fact remains that the industry has improved over time and these ‘moments of crisis’ have contributed to that,” Hougan added. “Short-term pain for long-term gain.”
Beyond Bitcoin,
Ether
– the second largest cryptocurrency – lost 4% to $1,800. Smaller cryptos, or altcoins, fared worse
Cardano
crumbling 9% and
Polygon
drop 10%. Memecoins suffered similarly, with
Dogecoin
a decrease of 7% and
Shiba Inu
loss of 6%.
Write to Jack Denton at jack.denton@barrons.com
