Cryptocurrencies recovered on Tuesday after the United States Securities and Exchange Commission brought a lawsuit against Coinbase, the largest crypto exchange in the country. This was the second lawsuit by the regulator in less than two days after suing Binance on Monday and referred to multiple cryptos as unregistered securities.
Bitcoin climbed 7%, reclaiming the $27,000 support level to reach a high of $27,368 on Tuesday. Earlier, it fell as low as $25,351, its lowest level since March. Ether gained nearly 5% to trade at $1,896.
At the time of writing, the big crypto is still leading the gains among the top cap cryptocurrencies on Wednesday, according to data from CoinMarketCap.
Top 10 Cryptocurrencies
The crypto market is still flashing green with the global market capitalization rising 2.90% on the day to reach $1.12 trillion.
Coinbase falls victim to SEC’s pursuits
On Tuesday, the SEC charged Coinbase for acting as an unregistered broker and digital asset exchange. In the lawsuit filed in the New York federal court, the regulatory agency is demanding that the company be “permanently restrained and enjoined” from continuing to do so.
SEC Chair Gary Genser said:
“If there’s a real value in these crypto tokens then compliance will build trust and the business model might change. What we’re doing at the SEC is pro-innovation because the capital markets really don’t work.”
Gensler also said that there was a lot of work for the digital asset industry adding “we stand ready to work to get them into compliance.”
In the complaint, the SEC lists several coins traded on Coinbase that it considers to be “crypto asset securities” including the ninth largest crypto by market capitalization, Solana (SOL). SOL price fell 3% following the news and now trades in the red at $20.
U.S. regulators have been cracking down on crypto businesses in 2023. Earlier this year, the SEC issued a Wells Notice to Coinbase warning the company of potential securities charges.
Bitcoin price recovering
It should be noted that the SEC kept away from including Bitcoin and Ethereum in its lawsuits against Binance and Coinbase. This is a reassuring sign for investors that U.S. regulators still consider the two top cryptos as commodities.
Investors then moved their funds from other cryptos listed as securities by the SEC into Bitcoin, pushing its price up. At the time of writing, the pioneer cryptocurrency is trading at $26,839 and is fighting immediate resistance from the 100-day Simple Moving Average (SMA) sitting at $27,081.
A daily candlestick close above this level would expose BTC to resistance from the 50-day SMA at $27,636. Shattering this barrier would clear the path for the much-awaited return to $30,000, representing 12% uptick from the current price.
BTC/USD Daily Chart
Supporting the bullish narrative for BTC was the upward movement of the Moving Average Convergence Divergence (MACD) indicator which had just sent a call to buy Bitcoin on the daily chart. This happened on Tuesday when the MACD line (blue) crossed above the signal line (orange) suggesting that the market sentiment had flipped positive.
On the downside, bears could continue taking profit on yesterday’s rally pulling BTC below the descending trendline, to tag yesterday;s swing low at $25,360. Lower than that, Bitcoi may drop to revisit the 200-day SMA at $23,350.
