 "Cryptocurrency")
Last week saw a turbulent week for the cryptocurrency market. On Tuesday, the United States Securities and Exchange Commission (US SEC) sued the largest crypto exchange Binance and its chief executive officer (CEO) Changpeng Zhao for breaching the rules.
Just the next day, it sued Coinbase Global for running an "illegal exchange".
Both Coinbase and Binance denied the SEC's allegations and have pledged to vigorously defend themselves in court. However, the crypto market reacted sharply to both allegations.
On Wednesday, the crypto market shed five per cent and major digital tokens like Bitcoin and Ethereum were down nearly 10 per cent. After a brief recovery, they plunged again after the charges on Coinbase surfaced.
However, on Friday, the market showed recovery. According to CoinMarketCap, Bitcoin was trading at $26,627, down just 1.7 per cent in the last seven days. Ethereum was trading at $1,843, just over two per cent down in the last seven days. The total market cap recovered to $1.1 trillion from $1.08 trillion on Wednesday.
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"The similarity in both the lawsuits is that the SEC claims that both platforms were trading certain tokens, that have been identified as 'unregistered securities'. Interestingly, both Bitcoin and Ethereum have not been mentioned in the filings as securities and hence have traded around the anchored levels of $27,000 and $1,800 respectively, down less than two per cent over the course of a highly eventful week," said Parth Chaturvedi, Investments Lead, CoinSwitch Ventures.
The reports revealed that Coinbase was mainly being sued for trading "unregistered securities", an issue that the exchange had itself brought to the lawmakers' notice, on several occasions.
"The markets realised this as a medium-term positive, which would bring much-needed clarity on the classification of crypto assets and sharply rebounded," Chaturvedi added.
Moreover, the US Federal Reserve (Fed) is set to announce its monetary policy decision next week. It is expected to be less hawkish and is keeping the markets buoyant.
"The SEC action on crypto firms has not impacted Bitcoin prices in a big way as the world's largest crypto holds strong above the $26,000 mark. The largest altcoin, Ethereum, also remains resilient and did not slide further in the last 24 hours which is mainly due to optimism around Fed's monetary policy decision which is due next week. There is a sense in the market that the Fed may relax its hawkish stance to boost market liquidity," said Shivam Thakral, chief executive officer (CEO) of crypto exchange BuyUcoin.
What to expect from crypto markets now?
"If Bitcoin successfully breaches the resistance at $26,750, a notable increase in its value is likely to occur. Furthermore, surpassing the next significant resistance level of around $27,000 could potentially propel the price even higher. However, it is important to note that the current support level is situated at $25,400," said Edul Patel, CEO and co-founder of crypto firm Mudrex.
