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SEC Cracks the Whip: Which Cryptocurrencies Are Set to Suffer the Most?

Published 14/06/2023, 08:24 pm
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  • The SEC is targeting lawsuits against major digital currency exchanges
  • Cryptocurrencies have been under pressure recently as a result
  • Meanwhile, Bitcoin is testing a key technical area
  • Last week, the U.S. Securities Exchange Commission (SEC) decided to launch a legal offensive against the largest digital currency trading exchanges: Binance and Coinbase (NASDAQ:COIN).

    The main focus of the accusations is potential illegal trading in cryptocurrencies, which the SEC believes should be classified as securities and subject to regulatory requirements.

    The commission lists more than 60 cryptocurrencies that it believes fall under the definition of a security, among which we can see the popular altcoins Cardano and Solana.

    One of the main arguments in this situation is the so-called Howey Test, which defines the criteria for determining what can be considered a security and what cannot.

    Critics, on the other hand, point out that it was introduced in 1946 and no longer corresponds to the realities of today's financial markets.

    The SEC's actions have created more headwinds, leading to a decline in the overall digital currency market.

    Cryptocurrencies Market Cap

    Solana Plummets

    The possible classification of Solana as a security would be a problem for the community as a whole, as can be seen in the asset's price, which over the past week recorded a decline of more than 26%.

    The aftermath of this event included its delisting from Robinhood.

    The Solana Foundation strongly rejects the classification defined by the SEC while declaring its willingness to cooperate with regulators.

    As a result, it looks like the key factor that will dictate the price in the medium term will be further reports on the current legal situation between the SEC and Binance, Coinbase.

    A legal victory against the regulator could significantly contribute to Solana's upward momentum.

    Cardano Follows Suit

    Cardano's recent categorization as a security by the SEC has led to a significant decline in its price, reaching its lowest levels since late 2020.

    Currently, there is support from the demand side, but the selling pressure remains a concern. If the downward trend continues, the next target could be the support area around $0.15.

    Cardano Weekly Chart

    According to the Santiment analytics platform, the average unrealized loss at the 0.33 level stood at 13%.

    This, coupled with the declining Age Consumed indicator indicating a reduced likelihood of long-term investors selling, may limit further declines.

    However, for a return to an uptrend, it is crucial for the legal situation to resolve, which would be reflected in a clear breakout above the 0.45 level from a technical standpoint.

    Will SEC's Move Support Bitcoin in the Long Term?

    According to statements from individual SEC members, it appears that both Bitcoin and Ethereum may not be classified as securities, giving them an advantage over their main competitors in the long run.

    This view is supported by the fact that neither digital currency was mentioned in the lawsuit. However, currently, the predominant negative sentiment is affecting the performance of the most prominent cryptocurrency.

    It is facing a significant test at the confluence of correction levels and the support level around $25,000.

    Bitcoin Daily Chart

    If the key support level around $25,000 is broken, sellers may target the next support near $22,000.

    In terms of the overall cryptocurrency market value, it's important to pay attention to today's Fed meeting. The decisions made during the meeting could significantly affect cryptocurrency prices in the coming days and weeks.

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    Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counseling or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. As a reminder, any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remain with the investor. The author does not own the stocks mentioned in the analysis.

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