Alleged crypto securities tank alongside BNB after SEC suits
Scattershot securities labels aimed at major cryptocurrencies sent prices lower. Bitcoin, however, remains unfazed.
Artsaba Family/Shutterstock, modified by Blockworks
Crypto is holding up surprisingly well despite the SEC-imposed doom wafting over the US, having only shed 2.5% from its total market capitalization.
But the 18 tokens (excluding BUSD) listed as crypto securities in the SEC’s Coinbase and Binance aren’t doing so hot, having collapsed more than 11% on average.
Bitcoin (BTC) and ether (ETH) — not featured in either court document — are down only about 2% each as of 9 am ET.
Monday’s Binance suit “led to an extreme selloff in the span of less than an hour, where we witnessed long liquidations totaling almost $300 million — a 2023 daily record as Bitcoin dropped over 5% and Ethereum around 4%,” Mike Tauckus, head of trading at BitOoda wrote in an analyst note.
Coinbase’s case was disclosed the next day, but the market rallied in the afternoon to erase the Binance-associated losses almost completely.
Due to its relatively small market caps and illiquid market, COTI underperformance (down 20%) is somewhat expected after it was labeled a security.
More robust projects are also struggling after the SEC’s claims, however.
The sandbox (SAND), algorand (ALGO), cardano (ADA), binance coin (BNB), FLOW, filecoin (FIL), polygon (MATIC), chiliz (CHZ), cosmos (ATOM), internet computer (ICP), voyager (VGX), decentraland (MANA), axie infinity (AXS), NEAR and solana (SOL) have all collapsed between 10% and 18% since word of the SEC lawsuits first broke.
With $12.6 billion collectively wiped from their market caps, those tokens are responsible for more than 25% of crypto’s total losses since the SEC sued Binance on Monday. Coinbase stock, meanwhile, has tanked 15.5%.
On average, all tokens listed in either lawsuit are down 14% over the past month, but still up 9% year to date.
SEC shouldn’t phase crypto volatility traders
Markets have reacted sharply to the SEC’s view on those tokens, but industry insiders aren’t totally sold on the agency’s reasoning.
Some claim evidence provided relies on technical misunderstandings and misses key context.
Still, SEC chair Gensler has defended his agency’s actions, insisting that crypto startups know exactly how to register but simply don’t want to.
All this while implied volatility for bitcoin and ether are sitting at historically low levels. “This low volatility regime may stick around until the market can make a sustained push through one end of the narrowing range,” BitOoda’s Tauckus said.
“A conscientious trader can take advantage of the current low liquidity and complacency in the market to profit via several low risk/high reward scenarios.”
Updated Jun. 9, 2023 at 10:10 am ET: Updated figures.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
