Bitcoin and ether experience significant losses following legal action against world’s largest crypto exchange
Cryptocurrencies experienced a sharp drop on Monday morning after news emerged that the Commodity Futures and Trading Commission (CFTC) had sued Binance, the world’s largest crypto exchange, for allegedly violating trading rules. Bitcoin’s price fell by 3% to $26,955.61, while ether fell 3.5% to $1,704.56.
CFTC accuses Binance of violating trading rules
In a court filing, the CFTC said that Binance had violated eight provisions of a commodities trading law designed to prevent and detect money laundering and terrorism financing. The legal action has the capacity to disrupt the exchange’s activities. Binance’s case is the most recent episode in this year’s series of regulatory actions against cryptocurrency companies. These actions have had a notable impact on the price of bitcoin and have caused it to deviate from its prior strong correlation with the stock market.
Binance’s regulatory troubles raise concerns among crypto traders
Dessislava Aubert, an analyst at crypto data provider Kaiko, said that the news about Binance was the main driver of the down move on Monday. he further stated that the crypto industry would face significant consequences if the US regulatory authorities take any action against Binance, considering that it is the largest cryptocurrency exchange. Ed Moya, an analyst at Oanda, said that Binance’s success was needed to ensure a good part of the crypto industry could grow, and that the news had unnerved some crypto traders.
Crypto-exposed equities also suffer losses
Equities with exposure to the cryptocurrency market experienced declines after the announcement regarding Binance. Coinbase and Microstrategy both saw a drop of 10%, while miners Marathon Digital, Hut 8, and Riot Platforms all fell by roughly 8%. The market downturn coincided with an increase in bond yields, which caused a 0.6% decline in the tech-heavy Nasdaq Composite. Higher rates make prospective profits less appealing, especially for growth-oriented enterprises.
Cryptocurrencies bounce off lows but remain in the red
After experiencing a decline, cryptocurrencies made a swift recovery on Monday, yet remained in negative territory. This is reminiscent of the reaction following Coinbase’s negative news on March 22. Despite this setback, Bitcoin is still projected to have a positive month, having gained 16%, while ether has seen a 6% increase. Prior to Monday’s drop, analysts had suggested that the March rally might be losing steam, but they also believed that a long-term bullish pattern had been established.
In conclusion, the legal action against Binance has raised concerns among crypto traders and has led to significant losses in cryptocurrencies and crypto-exposed equities. While cryptocurrencies quickly bounced off their lows on Monday, the news has highlighted the regulatory risks that exist in the crypto industry.
Disclaimer
The information presented in this Blogpost is solely for educational and informative purposes and should not be misconstrued as investment, financial or legal advice. Cryptocurrencies are a highly unstable and speculative market and their worth is susceptible to substantial fluctuations. Therefore, it is advisable to conduct personal research and seek counsel from qualified experts before making any financial decisions.
