In a market heavily influenced by Bitcoin (BTC) and Ethereum (ETH), their slight price decline has recently been overshadowed by a larger drop in larger altcoins. In particular, Cardano (ADA), BNB (BNB), Polygon (MATIC), and Solana (SOL) have seen more than 10% declines over the past week.
This downturn can be traced back to regulatory action taken by the US Securities and Exchange Commission (SEC) against industry titans Binance and Coinbase.
Regulatory pressure and the crypto market
This heightened market volatility follows allegations filed by the SEC on Tuesday in return for Coinbase for facilitating trading of crypto assets they labeled as unregistered securities.
The list of affected assets includes FLOW, VGX, MATIC and ADA. A similar charge was archived against Binance, where these assets, such as BNB, BUSD, SOL, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, among others, were categorized as securities. It is interesting to note that the SEC did not include tokens with substantial trading volumes such as ETH, USDC, USDT, LTC and BTC.
Charles Hoskinson, the founder of Cardano, responded to these allegations by suggesting that the regulatory action was a move to pave the way for a Central Bank Digital Currency (CBDC). According to him, the government wants to use the CBDC as a tool to gain control over people’s finances, facilitated by a selection of influential banks.
Hoskinson noted:
Regarding Binance, I read through the SEC complaint. It’s over 130 pages, but appears to be the next in a series of steps to implement chokepoint 2.0 in the United States. The end goal is a calendar-based CBDC that partners with a handful of massive banks and has end-to-end control over every aspect of your financial life.
The market impact on ADA, BNB, MATIC and SOL
In the wake of this regulatory oversight, the price of ADA has been on a downward trend in the market, dropping 15% in the last 7 days, with another 2.8% loss in the last 24 hours alone. At the time of writing, ADA is trading at $0.31, a significant drop from its pre-regulation price.
Despite the price drop, ADA’s trading volume rose from $228 million to over $400 million between last Friday and yesterday, indicating high selling pressure. It’s worth noting that more than $2 billion has been deducted from the asset’s market cap in the past week.
Similarly, other altcoins such as Polygon (MATIC), Binance Coin (BNB), and Solana (SOL) have mirrored ADA’s price action. In the past week, MATIC, BNB and SOL have recorded downturns of 13.6%, 15.7% and 11.4% respectively.
Notably, among the global crypto market cap, ADA currently ranks 8th with SOL and MATIC rankings below Dogecoin (DOGE). Meanwhile, despite the major impact on BNB, the asset still ranks third in the global crypto market.
However, this turbulent market activity underscores the substantial influence of regulators on the cryptocurrency market.
Featured image from iStock, chart from TradingView