The cryptocurrency market is in a bearish mood today, with prices of Bitcoin (BTC), Ethereum (ETH), and altcoins falling due to numerous regulatory enforcement actions. Markets continue to wobble following the Department of Justice’s (DOJ) agreement on November 21 to impose a $4.3 billion fine against Changpeng “CZ” Zhao and Binance.
Price action across cryptocurrency markets remains bearish as investors and money managers further digest the potential consequences of increased regulatory action on the industry.
US-led regulatory pressure on cryptocurrencies is gaining ground.
The cryptocurrency industry and regulators have a long history of not getting along due to various misunderstandings or mistrust about the real-world use cases for digital assets.
On November 21, the Department of Justice announced an enforcement action and settlement in which both CZ and Binance pleaded guilty.
According to the agreement, Binance will pay a fine of $4.3 billion and CZ will pay a fine of $159 million. The settlement included civil regulatory enforcement actions by government departments, including the U.S. Treasury and the Commodity Futures Trading Commission (CFTC).
Following the agreement, CZ announced that he had stepped down from his position as CEO of Binance. On November 28, CZ left his position as Chairman of Binance.US. This departure comes after reports that the Securities and Exchange Commission (SEC) is still looking for potential FTX-style fraud at Binance.US
Cardano founder Charles Hoskinson called the agreement “the end of an era.” Early indications from the Department of Justice (DOJ) and Attorney General Merrick Garland suggested strong action would be taken against the cryptocurrency sector, but the message was less specific. On November 28, Coinbase warned customers about a CFTC investigative subpoena against the Bybit exchange.
Risky assets are greatly influenced by investor sentiment, and this trend extends to Bitcoin and altcoins. To date, the threat of unfriendly cryptocurrency regulation, or at worst outright bans, continues to impact cryptocurrency prices month after month.
Euphoria for ETH and BTC Spot ETFs May Be Dwindling
Market sentiment soared on optimism that a potential spot approval of a Bitcoin exchange-traded fund (ETF) would come in November, but was later delayed by the SEC on November 17. This euphoria helped push the price of Bitcoin past $38,000 to its highest level in 18 months. .
However, the euphoria appears to be tempering with the intraday BTC price falling below the key $38,000 level on November 29th. Now, Bitcoin is struggling to maintain positive momentum during the month of November after a strong “Uptober.”
BlackRock believes there is no good reason for the SEC not to approve a cryptocurrency spot ETF, but the SEC appears prepared to delay until 2024.
On November 15, the SEC postponed its decision on Grayscale’s Ether futures ETF. Some analysts believe the Form 19b-4 filed by Grayscale is a potential “Trojan horse” for the agency.
Related: Real-World AI Use Case in Cryptocurrency No. 3: Smart Contract Auditing and Cybersecurity
Notably, the securities regulator decided on November 17 to postpone applications for the Hashdex and Global X ETFs. On November 28, the SEC extended the public comment period for Franklin Templeton’s Bitcoin ETF, extending its approval until 2024.
For now, with the potentially long wait, traders are likely to lock in profits from months of high prices now in the cryptocurrency market. Some analysts see Bitcoin ETFs as a “buy the rumor, sell the news” event.
Related: Bitcoin price fails to break $38.5K as US GDP fuels Fed hard landing concerns.
Futures Liquidation Drives Cryptocurrency Markets Down
The decline in major cryptocurrencies has led to a surge in liquidations across derivatives markets. While long and short derivatives traders are competing fiercely, short sellers are taking the lead on November 29th.
Over $44.9 million worth of long positions were liquidated across cryptocurrency markets in the last 24 hours, with $34 million in the last 12 hours. Cryptocurrency market prices are negatively affected when long-term derivative positions are liquidated without buying pressure from trading volume.
In the near term, cryptocurrency markets will continue to navigate multifaceted challenges, and the ebb and flow of various economic and regulatory factors will undoubtedly shape their trajectory for the foreseeable future.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.