Bitcoin Seesaws Around $27K As Investors Digest Binance-CFTC Lawsuit
Bitcoin (BTC) consolidated around $27,000 as investors continued to ponder the potential impact of the US Commodity Futures Trading Commission (CFTC) lawsuit against Binance and founder Changpeng Zhao over alleged violations, including operating an illegal exchange and a “sham ” compliance program.
BTC was recently trading at around $27,225, up about 1% in the last 24 hours. The largest cryptocurrency by market cap fell as low as $26,669 earlier in the day. BTC plunged from peaks above $28,000 after the CFTC lawsuit was filed on Monday and has fallen 3% in the past week.
“Bitcoin is showing such incredible resilience to what’s happening around it, even in the crypto industry, that you have to wonder how sustainable it can be,” Craig Erlam, senior market analyst at forex market maker Oanda, wrote on Tuesday. Note. He added that the CFTC-Binance-triggered price drop “doesn’t feel particularly significant.”
Investors are worried about the potential impact of the CFTC lawsuit against the world’s largest crypto exchange by trading volume, and increasing regulatory scrutiny that threatens to impose some of the same restrictions on the industry as on traditional finance.
Meanwhile, Binance and the CFTC sparred in the wake of the filing. In a blog post late Monday, Binance CEO Changpeng Zhao called the lawsuit “an incomplete recitation of the facts.” But in an appearance on CNBC on Tuesday, CFTC Chairman Rostin Behnam said the CFTC action “seemed to be a pretty clear case of evasion and something that we needed to aggressively address and do as quickly as possible.”
K33 Research’s research analysts also attributed the recent downside volatility to lingering effects of the Federal Open Market Committee’s (FOMC) 25 basis point interest rate hike last week and software provider MicroStrategy’s announcement on Monday that it had bought roughly $150 million more in bitcoin over the past week. five weeks and prepaid the remaining principal on a loan from failed crypto-focused Silvergate Bank. BTC fell 2% in the immediate aftermath.
“The adverse market reaction following a MicroStrategy announcement is typical,” K33’s research analysts wrote in a note sent to their client on Tuesday. “Market participants are absorbing the information that a known big buyer has completed, which means less liquidity on the buy side to support further upside.”
Ether (ETH), the second largest cryptocurrency by market cap, recently traded hands at around $1,772, a gain of nearly 4%. Crypto payments platform Ripple’s XRP token price jumped over 10% on Tuesday to 52 cents, the highest level in five months.
Stock markets turned red on Tuesday on banking uncertainty, with the S&P 500 and tech-heavy Nasdaq trading down 0.4% and 0.8%, respectively. The Dow Jones Industrial Average (DJIA) fell 0.3 percent.
