After the U.S. Securities and Exchange Commission’s legal battle with major cryptocurrency exchange platforms, the price of Bitcoin and Ethereum experienced significant losses.
Bitcoin dropped to $25,522 on Monday before bouncing to $27,204 within the last 24 hours
Holders of Bitcoin and Ethereum lost nearly 5% and 3%, respectively, since Monday. This caused the total market capitalization of cryptocurrencies to drop to $1.12 trillion.
The fall in prices could potentially delay a recovery in the market. Additionally, investors may remain on the sidelines until there is more clarity, including with the upcoming Federal Reserve meeting on June 14.
Binance promises to fight back against a lawsuit it received from the SEC. The exchange believes the lawsuit is a result of the SEC’s failure to provide clear guidance to the crypto industry.
To understand potential support levels for a recovery in Bitcoin, let’s analyze the chart.
Currently, Bitcoin has been trading within a declining channel pattern for several days. While the bulls briefly pushed Bitcoin above the 20-day EMA ($27,083) on June 4, the bears sold the rally as shown on the long wick on the candlestick.
On June 5, the price dropped below immediate support at $26,500 and continued to plummet into the crucial support zone between $25,800 and $25,250.
Buyers are expected to fiercely guard this zone as a break below it could lead to long liquidation and potentially descend towards $20,000.
A break and close above the descending channel may indicate the end of the corrective phase and a potential surge to $31,000.
Lawsuit Against Coinbase
Crypto exchange giant, Coinbase, has been hit with a lawsuit from the US Securities and Exchange Commission (SEC) alleging that it operates as an unregistered security exchange. This announcement follows a similar lawsuit filed against Binance, signalling a growing regulatory clampdown on key players in the industry.
The SEC accuses Coinbase of operating as an unregistered broker since 2019, soliciting potential investors, handling customer funds and assets, and charging transaction-based fees without the necessary registration. This move deprived investors of necessary protection, which includes inspection and recordkeeping requirements.
The SEC’s allegations were supported by a multi-state task force consisting of ten state securities regulators. Coinbase insists that the crypto sector needs fair legislation instead of litigation and will continue to operate as usual.
As a result of the SEC’s action, crypto assets experienced a further sell-off, with total market capitalization down 4.2% to $1.12 trillion, while Coinbase shares plummeted 17.74% pre-market trading.
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