Bitcoin falls to $25,800 in the wake of the SEC's lawsuit against Binance
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(Kitco News) - The cryptocurrency market experienced a widespread sell-off on Monday after the Securities and Exchange Commission (SEC) filed a lawsuit containing 13 charges against Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao (CZ), for operating an illegal platform in the U.S. and for the misuse of customer funds.
The downturn comes as crypto traders sold off positions en masse and pulled their holdings off Binance, with data from Dune Analytics showing that the exchange has seen a negative netflow of $503.3 billion worth of assets since the charges were announced.
Equities also fell under pressure in the afternoon, which erased any gains achieved in the morning session. At the close of markets, the S&P, Dow and Nasdaq were all in the red, down 0.20%, 0.59%, and 0.09%, respectively.
Data provided by TradingView shows that after the changes against Binance were revealed, Bitcoin broke below support at $27,000 and fell to a daily low of $25,570 before bulls were able to respond and bid it back above $25,800. This marks the lowest price for BTC since March 17.
BTC/USD Chart by TradingView
The top crypto was showing signs of weakness even before the charges by the SEC were revealed, with June Bitcoin futures prices trading lower in the early hours on Monday, according to Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: TradingView
“Trading has been choppy and sideways for two weeks,” Wyckoff said. “The bulls and bears are on a neutral overall near-term technical playing field. The direction in which prices move above the resistance line or below the support line seen on the chart will likely be the direction of the next significant trending price move.”
The Binance lawsuit appears to have been the deciding factor in which way the market would move, with Bitcoin falling below $26,000, a consistent level of support since the middle of March.
Amid the sudden dip, market analyst Pentoshi noted on Twitter that he is “Not in a huge rush to buy back yet,” instead opting to wait “to see something show some signs of bottoming, strength as opposed to knife catch.”
For those looking for insight into what level would be good to open a long position, technical analyst Mister Crypto highlighted the $25,000 zone as a strong entry point.
And MN Trading CEO Michaël van de Poppe called the Binance-inspired downturn a “moment of truth” for the total crypto market capitalization, noting that if the market cap falls below its 200-week moving average – currently located near 1.05 trillion – it would signal a continuation of the bear market.
Momento le truth for the total market capitalization here for #Crypto.— Michaël van de Poppe (@CryptoMichNL) June 5, 2023
First, actual, test of the 200-Week MA and EMA taking place for the Total Market Cap.
Holding = end of correction.
Losing = continuation of bear market. pic.twitter.com/p7hUKb68uX
Following Bitcoin’s lead, the altcoin market was a sea of red, with all but one token in the top 200 recording losses on the day.
Daily cryptocurrency market performance. Source: Coin360
Three tokens recorded losses of 20%, including Core (CORE), Pepe (PEPE), and Space ID (ID), while Conflux (CFX) fell by 17.84%, and Skale (SKL) declined by 17.13%.
The overall cryptocurrency market cap now stands at $1.085 trillion, and Bitcoin’s dominance rate is 45.8%.