Bitcoin recovers losses amid SEC lawsuit
June 9, 2023 4:22 pmVideo
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What could be worse for BTC/USD than regulators’ most menacing intervention in the cryptocurrency system, massive capital outflows, and fears of cryptocurrency exchanges being disconnected from banking services? However, after the 5% crash following the Securities and Exchange Commission’s lawsuit against Binance and its founder, Bitcoin quickly recovered its losses. In the past, during similar large-scale market roller coasters, the token rose by 11% within the following 30 days. Is history repeating itself?
The SEC accuses the world’s largest cryptocurrency exchange of operating an illegal trading platform in the United States, mixing client assets, and engaging in unlawful securities listings. Between June 2018 and July 2021, it generated $11.6 billion in revenue, with a significant portion coming from service fees. Clients immediately reacted by withdrawing over $800 million from Binance within the first 24 hours, causing the exchange’s native token, BNB, to plummet and detach from other cryptocurrencies.
Binance Token and Crypto Asset Index Dynamics
However, the outflow of funds from Binance slowed down after the Securities and Exchange Commission filed a lawsuit against Coinbase. These platforms account for about half of the world’s cryptocurrency trading volume. We are not talking about an individual player like the bankrupt FTX, but rather a systemic crisis. Therefore, holders are contemplating what to do with their money.
According to the SEC, cryptocurrency exchanges do not play by the rules of the financial system, posing high risks to users of their services. Officials believe there are already digital dollars, euros, pounds, and other currencies in the world. Why add something else? With such an aggressive approach, the future of the crypto industry becomes worrisome. Disconnecting it from the banking system would be a significant shock and a blow to trust in cryptocurrencies. However, Bitcoin’s stabilization indicates that investors are adopting a wait-and-see position.
The end of the longest bear market for the S&P 500 since the 1940s provides support to the “bulls” of BTC/USD. The broad stock market index has risen by 20% from its autumn 2022 lows, thanks to the resilience of the U.S. economy to the most aggressive tightening of monetary policy by the Federal Reserve in decades, hopes for a pause in this process in June, and the boom of artificial intelligence. Furthermore, improving global risk appetite extends a helping hand to income-generating assets, including Bitcoin.
After lawsuits from the Securities and Exchange Commission, investors are starting to doubt this. Cryptocurrencies are turning into toxic assets that should be disposed of as quickly as possible. However, doing so won’t be easy. Tokens have firmly entered our lives.
Technically, on the BTC/USD daily chart, a reversal pattern of an expanding wedge may be forming. The classical approach suggests buying from the level of 28,500. However, aggressive traders can start forming long positions on a breakthrough of resistance at 27,400.
The material has been provided by InstaForex Company – www.instaforex.com
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