In recent months, 19 cryptocurrencies, notably deemed unregistered securities by the Securities and Exchange Commission (SEC), experienced a dramatic dip in their combined market value, shedding roughly $20 billion.
These tokens included Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), Chiliz (CHZ), Near (NEAR), Flow (FLOW), Internet Computer (ICP), Voyager Token (VGX), Dash (DASH), Cosmos (ATOM), Binance Coin (BNB), Binance USD (BUSD), COTI (COTI), and Nexo (NEXO).
However, contrary to expectations, these tokens have witnessed a noticeable upswing in trading volumes since mid-June. The backdrop of this unexpected rise lies in the June lawsuits that the SEC filed against top exchanges, Binance and Coinbase Global Inc.
The repercussions were severe, and the implicated tokens bore the brunt. But the crypto realm often defies the norm.
Resilient Recovery Amid Regulatory Woes
Just two months after the significant blow to their market cap, these 19 digital tokens have started exhibiting signs of recovery, at least in trading volumes. Bloomberg reported citing Data from CCData which suggests that their cumulative trading share has escalated by roughly two percentage points, pegging it at about 13%.
This revival comes even though their overall market worth has diminished by roughly 20% since the commencement of the lawsuits.
Interestingly, platforms such as Bakkt, Robinhood Markets Inc., and Bitstamp have delisted some of these tokens. However, the ambivalence stemming from a court ruling regarding XRP – a case focusing on classifying what constitutes security – has encouraged traders to wager on these tokens.
Kyle Doane, a trader at Arca, remarked:
The tokens that have been named as securities are being traded as a proxy for regulatory clarity. Since the XRP ruling, regulatory clarity has theoretically worsened, resulting in poor price action.
Diverse Fortunes For Different Tokens
Notably, not all tokens were destined for a consistent path. The Solana blockchain’s native currency, SOL, took a substantial initial hit of around 35% in the past two months. However, it has since rallied to register a nearly 10% gain over the past 14 days. This price action has brought its price to trade slightly below $25 at the time of writing.
In contrast, ADA, Cardano’s native token, continues to struggle, declining about 20% since the start of June. The asset has continued to swim in red, with a trading price of $0.289, at the time of writing.
According to Bloomberg, the enhanced trading volume can be attributed to traders’ inherent attraction to potential price volatility compared to the broader crypto market.
For instance, Bitcoin’s price has remained comparatively stable for months. Gavin Michael, the CEO of Bakkt, observed, “Many initial supporters remain active, consistently trading in and out.”
Furthermore, while some coins encountered a significant price setback post the lawsuit, most have recouped their losses. Jacob Joseph, a research analyst at CCData, emphasized the waning impact of the SEC’s legal actions on several assets.
Bloomberg pointed out another vital aspect: the unwavering support these “tainted” coins receive internationally. Global exchanges continue to back them, with US exchanges representing a mere 10% of total crypto trading volume. Notably, Binance and Coinbase, among the most prominent global and US exchanges, have kept these tokens listed.
Featured image from Unsplash, Chart from TradingView