Bitcoin rebound falters amid SEC action on exchanges

Bitcoin lost momentum after a failed retest of the $27,400 resistance on June 6, indicating that investors became less confident after the latest regulatory actions by the US SEC against Binance and Coinbase

Bitcoin’s price lost momentum following a failed retest of the $27,400 resistance on June 6, indicating that investors became less confident after the latest regulatory actions by the US Securities and Exchange Commission (SEC) against Binance and Coinbase. Both exchanges are being sued on multiple counts, including failure to register as licensed brokers and offering unregistered securities.

As per Blockchain Association Chief Executive Officer Kristin Smith, the Securities and Exchange Commission is trying to circumvent formal rulemaking processes and deny public engagement. In the meantime, Insider Intelligence crypto expert Will Paige said the Securities and Exchange Commission’s aim is to police the space through enforcement in the absence of a regulatory framework.

Those criticisms explain why investors may be holding on to their expectations in the U.S. Financial Services Committee hearing set to be held on June 13.

The potential overreach of the Securities and Exchange Commission has resulted in ripples several times, including in the U.S. legislature. Sen. Bill Hagerty, for example, stated that regulators at the Securities and Exchange Commission are “weaponizing their role” and publicly called out SEC Chairman Gary Gensler.

Further reinforcing the theory that the cryptocurrency space can operate without crypto-banks, as the centralized exchanges are usually known, is the sudden rise in decentralized finance volumes.

The median trading volume across the top three decentralized exchanges climbed 444 per cent between June 5 and June 7. As decentralized exchange volumes soared, net outflows on Binance hit $778mln, the difference between the value of assets entering and exiting the exchange.

Bitcoin has been trying to regain the $27k support, but that might be harder than anticipated because of the approaching $670mln weekly options expiry on June 9.

It is worth noting that the actual open interest for the June 9 expiry will be lesser since bulls focussed their wagers above $27k. These traders got overly hopeful after Bitcoin added 9 per cent between May 25 and May 29, testing the $28k resistance.