Bitcoin and crypto market “red on fire” because of a series of US legal crackdowns

The cryptocurrency market has suffered a heavy blow after consecutive reports of the US cracking down on staking and stablecoin legislation.

Price movements of top cryptocurrencies on the market at 08:25 AM on 10/02/2023. Source: Coin360

On the morning of February 10, the cryptocurrency market experienced a new correction, sending red color on the price charts.

Bitcoin (BTC) dropped nearly 5% from $22,500 to $21,688, before recovering slightly to $21,850 at the time of the update.

1h chart of BTC/USDT pair on Binance exchange at 08:25 AM on 10/02/2023

Ethereum (ETH) has lost more than 6% of its value 24 hours ago, down from $1,620 to $1,524.

1h chart of ETH/USDT pair on Binance exchange at 08:25 AM on 10/02/2023

The top altcoins are “red floor” from 7-12%.

In the last 12 hours, the number of derivative orders liquidated was 201 million USD, with the amount of long orders accounting for more than 92%.

The value of cryptocurrencies liquidated in the last 12 hours, data taken from Coinglass at 08:25 AM on 10/02/2023

The reason for the drop came from a series of legal news from the US. Specifically, Kraken exchange has been charged by the US Securities and Exchange Commission (SEC) for not registering its staking service with this agency. Instead of choosing to fight legal, Kraken decided to pay a fine of 30 million USD to the SEC and terminate the staking service for all previously supported coins, except ETH until after the Shanghai upgrade next March.

Just on February 9, Coinbase CEO Brian Armstrong revealed that the SEC is trying to completely ban cryptocurrency staking because it considers it a form of disguised security. With the latest developments, it can be seen that Mr. Armstrong was aware of the SEC’s crackdown on Kraken.

Next, it was the turn of the BUSD stablecoin issuer for Binance, Paxos, which was investigated by the New York government. While that information has not been confirmed and the purpose of the investigation is unknown, it still resonates with Paxos being asked by the US Office of the Comptroller of the Currency (OCC) to withdraw its banking license.

Even so, cryptocurrencies representing decentralized/liquid staking projects are on the upswing, notably Rocket Pool (RPL) jumping more than 25% to $56.33 – RPL’s new ATH peak on Binance. Meanwhile, the current number 1 liquid staking project, Lido (LDO), quickly recovered from the market dump.

1h chart of the RPL/USDT pair on Binance at 08:25 AM on 10/02/2023
1h chart of LDO/USDT pair on Binance exchange at 08:25 AM on 10/02/2023

Another name that has been hit hard is Optimism (OP) when this layer-2 project suddenly announced its latest airdrop, releasing an additional 11.7 million OPs to more than 300,000 user wallet addresses.

1h chart of OP/USDT pair on Binance exchange at 08:25 AM on 10/02/2023

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