Takeaways:
-
Bitcoin is up 5.8%, leading the crypto market recovery after Monday’s sell-off.
-
BTC could benefit from investors ditching altcoins after the SEC deemed multiple tokens unregistered securities in lawsuits against Binance, Coinbase, one analyst said.
Cryptocurrency prices recovered on Tuesday with bitcoin (BTC) leading the charge a day after a mass sell-off triggered by the U.S. Securities and Exchange Commission (SEC) suing Binance, and despite a second suit against Binance rival Coinbase.
The largest cryptocurrency by market capitalization recently soared above $27,000, up almost 6% over the past 24 hours. On Monday, BTC fell near $25,400 as investors, already skittish from months of digital asset debacles, abandoned crypto after the SEC said Binance had violated securities law.
The broader crypto market also regained ground since Monday, albeit somewhat less than BTC. ETH, the second largest crypto by market value, was recently changing hands at slightly below $1,900, up 4.5% from Monday, same time. ADA and SOL, the tokens of the smart contract platforms Cardano and Solana, recently rose more than 1% a day after plunging more than 8% and 10%, respectively. Binance’s BNB native token was also in positive territory, while Polygon’s MATIC was down 1%. The SEC listed those tokens and nine others as unregistered securities in the two lawsuits.
The Coindesk Market Index (CMI), which tracks the price of a basket of tokens, recently rose 4.5%.
Bitcoin is benefitting
Notably, the SEC avoided mentioning BTC and ETH in its filings against Binance and Coinbase, a reassuring sign for investors that U.S. regulators consider both tokens commodities.
In a market report on Tuesday, Vetle Lunde, senior analyst of crypto research firm K33 Research, deemed BTC’s initial steep decline following the Binance lawsuit an overreaction.
“Bitcoin is classified as a commodity,” Lunde wrote. “Americans can purchase BTC through a plethora of exchanges, exchange-traded funds, payment apps, and more. Liquidity could consolidate further towards Coinbase and Kraken, but the market should not crash 5% on these developments.”
And in another market report, senior market analyst Edward Moya at trading platform Oanda, wrote that the SEC crackdown on altcoins could even benefit bitcoin.
“Bitcoin is becoming an interesting trade here as many crypto investors might just decide to give up on most altcoins and stick with what has worked best since cryptos were created,” Moya wrote. “With the SEC naming Solana, Polygon, Cardano, and BNB as securities, some traders might decide to abandon those positions on any major exchange, switch the position to a cold wallet, or just close out their position and reopen a bitcoin one.”