Bitcoin fell like a brick after news of the lawsuit between the SEC and Binance broke. The price shot down from about $27,000 to the – at the time of writing – price of $25,679. That represents a drop of about 5 percent over the past 24 hours.
Funnily enough, Ethereum is holding even stronger right now with a drop of only 3.93 percent.
Deeper soil approaching?
Now, of course, the question is whether the SEC’s lawsuit against Binance means Bitcoin is getting deeper and the bear market isn’t over yet. That may seem unlikely now, but if it turns out that Binance is kept running in the same way as FTX, it could just happen.
After all, Binance is a lot bigger than FTX and manages huge amounts of Bitcoin for their customers. If it turns out that they sold paper Bitcoin and people can’t trust that platform either, that could mean a significant drop for the price.
According to Jeff Dorman, Arca’s CIO, there isn’t much going on for the industry. Among other things, he says that the news that the SEC hates crypto is no surprise at all, which he has a point with.
“It just has no impact anymore,” says Dorman. That is not entirely true of course, if we look at the Bitcoin price, for example. Furthermore, according to Dorman, there are plenty of perfect alternatives in a global industry, after which he mentions Coinbase and Kraken, among others.
Hard to look ahead
All in all, it’s hard to look months ahead now and say sensible things about the SEC’s lawsuit against Binance. After all, it could be years before we get a final judgment or some degree of clarity. For example, look at the case between Ripple and the SEC.
However, this has added a lot of uncertainty, which has reduced the chance of a new Bitcoin bull run again. Investors simply do not like uncertainty and there is no denying that this takes it to a higher level.
Then there are the macroeconomic conditions, which are also not in favor of Bitcoin and other risk assets. The Federal Reserve has aggressively raised interest rates over the past 14 months and we may have yet to feel the full impact of that.
