The bullish momentum that drove Bitcoin (BTC) price to a 2023 high of more than $30,000 on April 11 has been completely dissipated following the recent surge of regulatory enforcement by the SEC, such as the lawsuit against Binance exchange on June 5.
The decrease in the value of Bitcoin follows a downturn in the entire market, and experts are concerned that BTC might reach new lows compared to its year-to-date performance.
Let’s examine the elements that are influencing Bitcoin’s price today more closely.
US-led regulatory pressure against crypto intensifies
On June 5th and 6th, the United States Securities and Exchange Commission (SEC) filed civil lawsuits against two of the biggest centralized crypto exchanges, Binance and Coinbase. The SEC highlighted 61 distinct cryptocurrencies, representing a value of $100 billion, that it considers securities. Additionally, Coinbase was served with a Show Cause Order by a coalition of 10 U.S. states, alleging that it was breaking securities laws.
The SEC has already declared that Bitcoin is not a security, however, certain market analysts are now questioning whether the recent enforcement actions are a sign of the commencement of Operation Chokepoint 2.0, which seeks to limit access to all digital currencies. This has some Bitcoin advocates questioning if the crypto market and BTC have already reached their lowest points.
The heightened regulatory oversight in the United States has caused a change in the distribution of Bitcoin supply across regions. While the US had a majority of Bitcoin’s supply in 2020 and 2021, this has since reversed and has decreased by 11% since mid-2022.
Bitcoin is heading towards meeting the goals of achieving ‘Net Zero’.
Bitcoin futures liquidations reach 3-month high after SEC enforcement
On 5th June, more than $106 million worth of Bitcoin longs were sold off. When there is no buying support from trading volume to counter the liquidation of BTC longs, it has an adverse impact on the price of Bitcoin.
The surge in liquidations and lack of new trading has caused the Fear and Greed Index, a measure of investor sentiment, to return to “fear” levels. With heavy long liquidations, the influx of exchange netflow could indicate that more Bitcoin selling pressure is imminent.
Can Bitcoin price reverse course?
Despite the present-day uncertainties in the crypto market, it appears to have not altered institutional investors’ long-term perspective. Recently, Cboe Digital, a major options exchange in the U.S., had its application to provide margined futures contracts for Bitcoin sanctioned by the U.S. commodities regulator, even in the face of an unfriendly regulatory climate. This Cboe Digital authorization will assist in raising Bitcoin awareness among institutional investors.
An analyst has predicted that the Bitcoin price will experience another challenge to its 200-week trend line.
The cost of Bitcoin remains heavily influenced by macroeconomic occurrences, and it is probable that further regulatory measures will continue to have an influence on the price of BTC.
In the long run, market players still anticipate that the worth of Bitcoin will bounce back, particularly as more monetary organizations appear to be accepting BTC.
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