Crypto Markets Experience Weekend Plunge Amidst SEC Lawsuits Against Leading Exchanges

The cryptocurrency market took a hit over the weekend as both Ethereum and Bitcoin faced significant drops. Ethereum declined by 4%, while Bitcoin experienced a 2.5% decrease since Saturday. This bearish price action can be attributed to recent legal actions by the U.S. Securities and Exchange Commission (SEC) against two prominent centralized exchanges, Binance and Coinbase. The lawsuits allege violations of U.S. securities laws.

SEC Lawsuits Shake the Crypto Market:

Coinbase, in particular, has been targeted by the SEC, which claims that several digital assets, including SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO, should be classified as securities. As a result, most of these assets have experienced significant crashes ranging between 22% and 37%, except for NEXO, which saw an 8% drawdown. Reacting to these allegations, Solana, Polygon, and Cardano have publicly rejected the SEC’s classification of their native tokens.

Ongoing Regulatory Battles Pose Challenges:

Although the crypto markets initially rebounded after the initial pullback last week, the recent weekend downturn suggests that the regulatory challenges faced by leading cryptocurrency exchanges may not be easily shrugged off. This development indicates the potential impact of regulatory actions on the market’s stability and investor sentiment.

Defi Assets Suffer Losses:

In addition to the decline in significant cryptocurrencies, top decentralized finance (DeFi) assets also experienced losses. LINK, LDO, AAVE, and CRV saw their values diminish by 15% to 22% over the past week. However, two of the top 50 DeFi protocols, OlympusDAO and Linea, showed growth, with OlympusDAO increasing by 0.3% and Linea experiencing an impressive 18.5% increase.

Bitcoin Dominance Surges:

Interestingly, while many tokens faced significant losses, Bitcoin remained relatively unaffected, increasing BTC’s market dominance to its highest level in two years. On June 10, Bitcoin dominance reached 47.5%, a level unseen since May 2021, according to CoinMarketCap.

On-Chain Ethereum Activity Slows Down:

As the market dropped, Ethereum’s on-chain activity experienced a sharp decline. According to Ultra Sound Money, Ethereum’s weekly burn rate dwindled to only 2,683 ETH. In comparison, the network burned 54,923 ETH during the previous month, indicating a significant slowdown. Additionally, the fees associated with simple token transfers on the Ethereum network decreased to $0.52 from a yearly high of $3.78 a month ago, as reported by Ycharts.

The recent weekend plunge in the crypto market, triggered by the SEC’s lawsuits against major exchanges, highlights the market’s vulnerability to regulatory actions. The decline in Ethereum’s on-chain activity further adds to the concerns. As the industry navigates these challenges, investors and market participants will closely monitor regulatory developments and their impact on the crypto ecosystem.