The SEC's recent lawsuits against Coinbase and Binance.US have sent shockwaves through the market. It's not the first time the SEC has targeted centralized crypto exchanges, but this time the impact has been substantial. The SEC has been busy this year, getting entangled with Bittrex, Kraken, Gemini, and Paxos, so this move wasn't entirely unexpected.
The Coinbase lawsuit is particularly significant. The SEC seems to be suggesting that almost all altcoins out there are unregistered securities. Did that wreak havoc on the altcoin market! We're talking about hefty double-digit losses for popular coins like MATIC, SOL, ADA, and BNB.
But amidst all the chaos, there were a couple of survivors. Stablecoins and Bitcoin managed to weather the storm, proving their resilience when Robinhood decided to delist major altcoins. Investors flocked to these safe havens while the altcoin market took a pounding.
The aftermath? The altcoin market cap, excluding Bitcoin, has shrunk by a staggering $35 billion since last Friday. Market makers abandoning ship on Binance.US played a big role in this downturn.
Speaking of Binance.US, they're facing a serious liquidity drought. Just four days after the lawsuit bombshell, they halted USD deposits. It's no surprise considering the laundry list of charges they're facing, including wash trading. Liquidity has taken a massive hit, dropping by a whopping 77% across top tokens and stablecoins.
The repercussions of the lawsuits also reached Binance's international operations, with their market depth taking a 7% hit. But interestingly, Binance's netflow is rising, indicating that traders might be seeing it as a safe harbor amidst the storm.
Coinbase didn't escape unscathed either. Their market depth erosion was even more severe, shrinking by 16%. On the flip side, this situation worked in their favor, as Binance.US lost a significant chunk of their US market share, benefiting Coinbase, which now boasts a dominant 64% share compared to their pre-lawsuit 46%.
It's a critical moment for the US crypto market. Regulators' actions have left many wondering about the future. If lawmakers don't step in, we might witness a dwindling crypto scene in the US, with other markets like Singapore, UAE, Hong Kong, and the Eurozone becoming more attractive. Let's keep an eye on this space!