Crypto Market Dips Amid Regulatory Pressures and Bitcoin ETF Delays
Summary:
Regulatory enforcement actions have led to a significant market downturn for Bitcoin (BTC), Ether (ETH), and other altcoins, primarily due to the recent $4.3 billion DOJ settlement involving Changpeng “CZ” Zhao and Binance. The continual regulatory pressure and uncertainties have negatively affected investor sentiment and market performance. Additional factors, such as postponed Bitcoin exchange-traded fund (ETF) approvals and a rise in liquidations within the derivatives market, contribute to the market decline. Despite previous market highs, Bitcoin is currently struggling to maintain positive momentum.
Bitcoin (BTC), Ether (ETH) and various altcoins are experiencing a downward trend following a series of regulatory enforcement actions on the cryptocurrency market. The recent settlement on Nov. 21 by the Department of Justice (DOJ) involving Changpeng “CZ” Zhao and Binance, who agreed to pay $4.3 billion in penalties, dealt a significant blow to the market. The reaction to the announcement has overall led to a decline in the crypto market as potential ripple effects from further regulatory pressure gets assessed and considered by investors.
Over time, conflicts between cryptocurrency industry stakeholders and regulatory authorities, arguably fueled by misunderstandings and mistrust over the purposes of digital assets, have been a common occurrence. The DOJ declared on Nov. 21 enforcement actions and an agreed settlement involving CZ and Binance where both defendants pleaded guilty. Following this announcement, Binance will pay up to $4.3 billion in penalties, whilst CZ is liable for $159 million. Post-settlement, CZ publicly announced his resignation as CEO of Binance, formalizing his exit as Binance.US chair on Nov. 28. Additionally, the Securities and Exchange Commission (SEC) is reportedly investigating Binance for potential fraud.
Reflecting on the case, founder of Cardano, Charles Hoskinson, characterized it as a profound shift in the industry. The DOJ and Attorney General Merrick Garland hinted at possible further stringent measures against the sector though the details weren't clear. Coinbase customers were alerted on Nov. 28 about a subpoena linked to a CFTC probe concerning Bybit exchange. The volatility of Bitcoin and altcoins have often been impacted by the constant regulatory uncertainties.
Earlier market optimism over a possible Bitcoin spot exchange-traded fund (ETF) approval in November boosted sentiment, but this was later postponed by the SEC on Nov. 17, dimming the previous market enthusiasm that took Bitcoin to a peak of 18-month high above $38,000. Bitcoin is presently grappling with maintaining the positive growth it enjoyed in the previous month. While investment management corporation, BlackRock, disputes the reasons behind any deferment of approval for a cryptocurrency spot ETF by the SEC, the latter appears set to delay until 2024. The SEC also held off a decision on Grayscale’s Ether futures ETF on Nov. 15.
Due to potential long delays, traders might already be cashing in their profit from the present high prices in the crypto market. Many market observers believe the Bitcoin ETF could be a "Buy the rumor, sell the news" scenario. On Nov. 17, ETF applications from both Hashdex and Global X were deferred by the SEC. On Nov. 28, the SEC prolonged the Franklin Templeton’s Bitcoin ETF's public comment period, setting approval further into 2024.
The downturn in major cryptocurrencies has resulted in a slew of liquidations within the derivatives market as traders of short and long positions duke it out, with short-sellers taking control on Nov. 29. In the last 24 hours, over $44.9 million in long positions have been liquidated across the market, including $34 million in the preceding 12 hours. The ebb and flow of various economic and regulatory factors will undoubtedly continue to impact the future of the cryptocurrency market.
This article does not constitute any form of investment advice or endorsement. Every investment and trading decision carries risks, therefore, readers should undertake diligent research before making a decision.
Published At
11/29/2023 8:00:04 PM
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