Bitcoin, Ether rise amid ‘swoon-soar’ trading after SEC lawsuits against Binance, Coinbase

Bitcoin prices rose in Friday morning trading in Asia, but failed to break back above US$27,000 after a rollercoaster week in crypto markets following the lawsuits by U.S. securities regulators against the Binance and Coinbase exchanges. Other top 10 non-stablecoin cryptocurrencies gained, with Polygon’s Matic token leading the winners.

Top 10 gain ground

Bitcoin strengthened 1.06% over the last 24 hours to US$26,551 at 7:00 a.m. in Hong Kong, making up some losses from earlier this week after the Securities and Exchange Commission (SEC) filed lawsuits against two of the world’s biggest exchanges, alleging dozens of of crypto tokens have been illegally offered and traded as unregistered securities. The world’s largest crypto by market capitalization is now down 1.26% for the past seven days after sharper declines earlier in the week, according to data from CoinMarketCap.

Ether climbed 1.1% to US$1,849, and logged a 0.98% weekly decline.

Polygon’s MATIC was the biggest gainer among the top 10, with a 2.69% rise, but it has lost 12.02% in value for the past week.

Binance’s BNB added 2.01% in the past 24 hours, the second-largest rise among the top 10, but is a big loser for the week, down 13.9%.

The total cryptocurrency market cap edged up 0.35% to US$1.1 trillion in the 24 hours through to 8:30 a.m. in Hong Kong, while daily trading volume dropped 35.3% to US$25.9 billion, according to CoinMarketCap data.

In a new court filing on Wednesday, the SEC said transactions involving several billions of dollars of customer funds moved through now-defunct Silvergate Bank and Signature Bank under accounts allegedly controlled by Binance officials, including chief executive Changpeng Zhao.

Sachin Verma, an accountant employed by the SEC, said in the filing that some of the funds were moved to accounts suspected to belong to offshore firms linked to Zhao and Binance, in various regions including the Seychelles, Lithuania and Kazakhstan.

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Zhao tweeted on Thursday that this is “simply false” in response to a CoinDesk article that said US$12 billion of funds was sent to Zhao, citing the Wednesday filing.

“To the best of my knowledge, Binance.US had in total roughly US$2 billion in user funds. This number in USD equivalent fluctuates a little as crypto prices change. And declining as users withdraw due to recent news,” Zhao tweeted. “All user funds are accounted for, and never left the Binance.US platform (unless users withdraw themselves of course), ever.”

Gordon Grant, co-head of trading at crypto brokerage Genesis Trading, said that this week’s sweeping regulatory pronouncements “saw crypto realized volatility begin to rear its head.”

“After seeming months of coiling in an ornery, reptilian rip-rap price action, the successive Monday and Tuesday swoon-soar tandem on the back of Binance and Coinbase headlines preempted consternation, head scratching and, if nothing else, a recognition that the asset class remains habitually prone to lurid gaps in price action,” Grant said.

In an email, Le Shi, head of trading at Auros, a crypto market-making and algorithmic trading firm, said cryptocurrency trading volumes continue to “plumb the depths” last seen in the middle of the last crypto bear market.

CoinShares, a European crypto investment firm, said in a Thursday report shared with Forkast that while the SEC lawsuits seem to carry more severe implications for Binance, the potential impact on Coinbase and the broader crypto industry is significant.

“The charges insinuate that a majority of crypto assets should be categorized as securities, which would radically modify the regulatory landscape, potentially confining access to regulated Wall Street entities (assuming that they have the appetite once the litigation is over),” CoinShares wrote.

CoinShares added that the shift could potentially place the control of the crypto industry within the grasp of traditional financial institutions.

NFT sales drop

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.

In the non-fungible token (NFT) market, the Forkast 500 NFT index dipped 1.07% to 3,219.65 in the 24 hours to 9:45 a.m. in Hong Kong. The index was down 4.59% for the week.

NFT sales on Ethereum fell 14.4% over the last 24 hours to US$13.72 million, and sales on the Bitcoin network dropped 9.34% to US$3.53 million, according to CryptoSlam data.

“[It’s a] hard market to analyze right now,” Yehudah Petscher, NFT Strategist at Forkast Labs, the parent company of Forkast.News, said on Friday.

“On one hand I believe we’ll see capitulation to the negative news, especially once the SEC files lawsuits against (NFT) projects, but at the same time, we are seeing bullish news from projects, art, among others, on an almost daily basis,” Petscher added. “I don’t think the SEC’s lawsuits have played a factor yet. They should soon.”

Uncategorized Ordinals – recently popular Bitcoin Ordinals that are not part of an established collection – saw the largest sales in the past 24 hours with a 74.13% rise to US$1.54 million.

The Captainz, an Ethereum-based collection, recorded a 2.33% increase in sales to US$1.12 million, making it the second most sold collection in the past day, followed by Mythos chain-based DMarket’s US$1.11 million daily sales.

In another development, crypto exchange Kraken has launched its NFT marketplace out of beta with over 250 collections.

Luca Netz, the chief executive officer of intellectual property firm and NFT collection Pudgy Penguins, is set to launch a Web 3.0 licensing marketplace named Overpass as early as late June, according to a Thursday report by media firm NFT Now.

Pudgy Penguins is an Ethereum-based NFT collection of 8,888 unique digital assets. It is the 19th largest collection in all-time sales, with more than US$257 million traded, according to CryptoSlam data.

U.S. stock futures fall

U.S. stock futures fell as of 10:10 a.m. in Hong Kong after the major U.S. stock indexes posted strong gains overnight. Dow Jones Industrial Average futures dropped 0.14%, and S&P 500 futures dipped 0.1%. Nasdaq Futures fell 0.1%.

Overnight in the U.S., the Nasdaq Composite rose 1.02%, and the Dow Jones Industrial Average climbed 0.5%. The S&P 500 added 0.62%, hitting a new high for the year so far.

In macroeconomic developments, the U.S. Labor Department reported Thursday that the country’s initial jobless claims totaled 261,000 for the week ended June 3. That was the highest weekly level for such claims since October 30, 2021.

The jobless claims pointing to a slowing of the economy are another factor suggesting the U.S. Federal Reserve’s more than year-long hikes in interest rates are having an effect and may influence the Fed’s decision-making on rates at its meeting on June 14.

U.S. interest rates are now between 5% and 5.25%, the highest since 2006.

The CME FedWatch Tool predicts a 74.8% chance the Fed will leave rates unchanged at next week’s meeting, and a 25.2% chance for another 25-basis-point rate hike.

(Updates with equity section.)