Bitcoin and Other Crypto Drop
The news that Binance, by far the biggest cryptocurrency exchange in the world, is being sued by American regulators caused traders of digital assets to become more cautious, which led to a decline in the price of bitcoin and other cryptocurrencies on Tuesday. Yet, that is not the only explanation for the decreases.
As its most recent rise gained traction and prices rose to over $28,500, the highest level since last June, the price of Bitcoin has dropped 3% over the previous 24 hours to $27,000, the lowest continuous price for the biggest cryptocurrency in almost two weeks.
The CFTC’s unexpected lawsuit against Binance, according to analyst Alex Kuptsikevich at broker FxPro, is what caused the decrease. “Investors should reevaluate their financial security. Cryptocurrency exchanges pose an even greater threat than banks do.”
In fact, the Commodities Futures Trading Commission sued Binance and Changpeng Zhao, its co-founder and CEO, on Tuesday, claiming that they had broken the law requiring the trading of futures and other derivatives on authorized platforms.
Yet there’s a chance that’s not the only thing bringing costs down in the near future. On Monday, the software business MicroStrategy (ticker: MSTR), founded by prominent Bitcoin supporter Michael Saylor, disclosed that it had acquired another batch of Bitcoin, this time 6,455 coins, for almost $150 million.
Since higher rates reduce demand for risk-sensitive assets, Bitcoin is vulnerable to macroeconomic dynamics and movements in the Dow Jones Industrial Average and S&P 500 due to the changing outlook on interest rates. Tuesday sees the publication of economic data covering trade, inventories, and consumer confidence, along with public remarks from a Federal Reserve official. But, traders will likely have to wait until Friday for the next significant macro event.
Ether, the second-largest cryptocurrency behind Bitcoin, decreased 1.5% to $1,730. Cardano fell 1%, and Polygon fell 2.5%, as were other smaller cryptocurrencies or altcoins. The Binance exchange’s native token, BNB, fell 5%. Dogecoin and Shiba Inu both lost 1.5%, making Memecoins weaker overall.
Crypto will soon be legal in Hong Kong
In October 2022, the first reports of Hong Kong’s decision to legalize crypto trading and permit retail users to transact in digital assets appeared. The SFC financial regulator’s consideration of permitting trading on virtual assets ETFs was later confirmed in writing.
A month later, SEBA Bank, a financial institution that supports cryptocurrencies, made the decision to open an office in Hong Kong with the goal of growing in the APAC region.
When reports broke in October that the SFC had contemplated legalizing retail bitcoin trading, a significant amendment was made and released in February. The commission announced it would start formally regulating the industry on June 1 after launching a consultation on the topic more than a month prior.