Bitcoin (BTC) plunged below $27,000 after the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its founder Changpeng Zhao over allegations that the exchange knowingly offered unregistered crypto derivative products in the US, a violation of federal law.
The BTC/USD trading pair on the Coinbase exchange fell to $26,525, its lowest point since March 17, TradingView data showed. The largest cryptocurrency by market cap recently traded at $26,978, down 3.1% in the last 24 hours.
“As far as I can tell, the crypto community is putting this news on the ̵[ads1]6;here we go again’ pile,” Julius de Kempenaer, senior technical analyst at StockCharts.com, told CoinDesk.
Kempenaer said the Binance-CFTC lawsuit “very likely” sent BTC’s price lower. However, he added that the lawsuit’s “implications are unclear,” although it provided the latest example of increased regulatory scrutiny, a trend the industry will continue to monitor closely. He said bitcoin could fall to its previous breakout level near $25,000.
“As long as that level holds, the break from a long-term bottom formation is still in play,” he said. But he added that “taking out heavy overhead resistance between $29,000 and $32,000 will clear the way for a much stronger move higher.”
Monday’s Binance-CFTC news caught traders betting on a price gain. They liquidated about $39 million of BTC’s long positions, according to data from Coinglass.
In the lawsuit against Binance filed in US District Court in Illinois, the CFTC named several cryptocurrencies, including BTC, ether (ETH), litecoin (LTC), tether (USDT) and Binance USD (BUSD). Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler has previously suggested that proof-of-stake tokens are securities.
ETH, the second-largest cryptocurrency, fell below $1,700 before recently rebounding to $1,703, still down 3.6% from Sunday, the same time. BNB, the native token of the Binance-initiated blockchain network BNB Chain, has fallen over 5% to around $310 from around $327 a day ago. Litecoin (LTC) traded down almost 4.8%.
The regulatory uncertainty is a “concerning” factor in moving the markets, particularly the specific allegations in the CFTC lawsuit, Riyad Carey, research analyst at crypto data firm Kaiko, told CoinDesk.
“Binance is by far the largest crypto exchange in the world and thus has an outsized impact on the markets,” Carey said, though he added that the decline in the markets has not been “too severe” given the importance of this regulatory news.
Stock markets were mixed Monday afternoon as investors weighed the announcement that regional lender First Citizens BancShares would buy most of the business of Silicon Valley Bank. The S&P 500 and the Dow Jones Industrial Average (DJIA) rose by 0.4 and 0.8% respectively. The technology-heavy Nasdaq fell 0.1 percent.