Good morning. Here’s what’s happening:

Bitcoin prices: Bitcoin fell to $25.4K after Binance was sued by the SEC. Will the markets recover?

Insights The market capitalization of stETH is now the seventh-largest among digital assets. What is behind this move, and will it continue?


SEC’s lawsuit sends crypto markets into a tailspin

Digital asset prices were shook by the latest blow to the crypto industry on Monday.

Bitcoin is currently trading at around $25,750. This is down almost 5% in the last 24 hours. The initial decline in Bitcoin’s price occurred within two hours of the Securities and Exchange Commission filing a lawsuit against Binance accusing it of violating securities law. For most of the week, the largest cryptocurrency in terms of market capitalization remained comfortably above $27,000. However, the allegations made against Binance have rekindled concerns about the integrity of the industry and regulators’ intent to exert greater control over exchanges. Binance and other exchanges have faced regulatory scrutiny for many years.

Bob Ras, the co-founder and CEO of Sologenic (a blockchain-powered platform for tokenizing securities) told CoinDesk that “the Binance news led to a huge sell-off but it wasn’t surprising.” “Rumors have been circulating for some time regarding a possible action against Binance.”

Ras said he was not convinced that “we will experience massive liquidations” similar to the ones following the 2022 implosions of Luna, Celsius, and FTX. “We saw many forced sellers back then. There aren’t nearly as many sellers forced to sell as there used to be. “I suspect we’ll be experiencing a gradual rebound here.”


Ether tumbles

Ether, which is the second-largest crypto by market value, has been trading below $1,800 for the past few days, down more than 5% since Sunday. and ETH_, other major altcoins also followed the same path as bitcoin on Monday. The majority of their losses occurred in the hours following the SEC lawsuit. BNB, Binance’s exchange token, as well as SOL, native cryptocurrency on the Solana Blockchain, have recently fallen more than 10%. ADA, MATIC, tokens for smart contract platforms Cardano, Polygon, respectively, as well as popular meme coin DOGE, have recently fallen more than 8%. Even litecoin fell over 9%, despite the fact that it has been on a rally in recent weeks. The SEC lawsuit called these tokens unregistered security.

CoinDesk Market Index is a measure for crypto market performance. It was down by more than 6%. The Index is composed of six different sectors, including DeFi and computing, as well as culture and entertainment. The crypto Fear & Greed Index remained neutral where it had been for most of the year.


Industry stocks tumble

Joe DiPasquale of BitBull crypto fund manager called the SEC lawsuit “unsurprising” but added that the exclusion ether was a “good sign.”

stocks that are industry-focused fell. Coinbase’s stock dropped more than 5% after the filing and more than 10% at the close of market. MicroStrategy shares (MSTR), a company that holds a large amount of bitcoins on its balance sheets, dropped by more than 8.5%. Bitcoin miners Riot Blockchain and Marathon Digital both fell more then 8%. Bitfarms, which is a Bitcoin farm, also fell by more than 7.4%. Gold, a safe haven asset, traded at a flat rate just below $1980.


SEC litigation fallout

The fallout from lawsuits seemed to reach all corners of crypto. Binance suffered more than half a billion dollars in net outflows by Monday afternoon (ET), according to a Dune Analytics graph from crypto investment product provider, 21Shares. Chart shows that traders withdrew over $1 billion in digital assets, while only $546 million was deposited. CoinGecko’s crypto data platform reports that the +2% depth of BTC on Binance amounts to $2.7 million. Charles Storry is head of growth for Phuture a crypto index platform and told CoinDesk this was “very low levels” in terms liquidity.

Strahinja Savic of Toronto-based crypto platform FRNT financial, who is the head of data analytics, wrote a Telegram message to CoinDesk to note that Binance “continued operating relatively normally” since it had been charged by CFTC earlier this year. He wrote that US users had been banned from Binance for a long time. It’s difficult to pinpoint a specific element in this story that will change the status quo.

He continued: “It is important to remember that Binance’s issues with regulation do not involve bitcoin.” It’s difficult to imagine that any trader would look at the SEC allegations and think they are damaging for the bull thesis on bitcoin. It’s not surprising that bitcoin is falling given the cross-collateralization of the market and the exaggerated correlations.

Ras from Sologenic believes that the U.S. Central Bank will likely return to a positive momentum if it pauses raising interest rates in this month or at a later date during the summer.

He noted that it would take some time for confidence to be restored in the market, as investors are “feeling nervous”. It is clear that the SEC’s actions have pushed many crypto projects outside of the United States. This has a negative impact on the U.S. innovation and economy.

The Biggest Gainers

Today, CoinDesk has no winners.

Biggest Losers

According to CoinGecko, Lido’s StETH token has now surpassed Cardano in market capitalization, and is only behind XRP.

(Coingecko)

stETH is the winner over ADA, because the market is more comfortable with staking and has been looking for a staking option that won’t be affected by the uncertainty of U.S. regulations.

The only unstaking parades so far have come from the shutdowns of Kraken’s staking services – and a large amount of staked ether was returned to the system through stETH.

This should be a strong endorsement for stETH as the staking system behind it is backed by a large number of institutions. CoinDesk reported that the surge in demand for ether stakes has resulted in a long wait for almost 50,000 validators. This is especially true after the Shapella upgrade which triggered a surge of deposits and a new influx of market participants locking up over 19 million ETH. Analysts who spoke with CoinDesk continue to minimize fears that a price crash will occur after the Shanghai upgrade. They have been proven correct.

Staking seems to be a permanent market. Lido is the clear leader, with 28% of market share and $13.4 billion locked in value, according to DeFi Llama. It’s also a competitive market; there are 60 protocols that have over $1 million TVL. Lido ‘s closest competitor has $2.2 Billion in TVL .

This ship could be sunk if more ether is staked and becomes profitable. Currently, it is only 31%. However, we are just one bank failure away from hitting 50%. Will there be an influx of withdrawals?


Important events

12:30 pm HKT/SGT (4:30 UTC). Australia Rate Decision

5:00 p.m. HKT/SGT(9:00 UTC) Eurozone Retail Sales (YoY/April)

10:00 p.m. SGT/HKT (14:00 UTC). Canada Ivey Purchasing Managers Index for May.


CoinDesk TV

If you haven’t seen it yet, here is the latest episode of “First Mover” on CoinDesk TV.

Bitcoin (BTC), which is down by almost 2% in the last 24 hour, has dropped back to below $27,000. JPMorgan released a report that found retail demand for bitcoin will likely remain strong before the next halving. Josh Gilbert, an eToro analyst, weighed in. Kristina Smith, CEO of the Blockchain Association, joined us to discuss the amicus brief that the group filed in a lawsuit brought by Coin Center and the Treasury Department against its sanctions watchdog. Also, take a look at our first Consensus @ Consensus Report.

Binance withdrawal on track to be largest since March Crypto Banking Crisis : Blockchain Data shows that the exchange suffered around $503 million of net outflows Monday due to SEC charges.

SEC Sues Binance Crypto Exchange and CEO Changpeng Zhao for Alleged Multiple Securities Violations : Already, the company is facing a lawsuit from the Commodity Futures Trading Commission.

El Salvador’s Volcano Energy Secures a $1B Commitment for a 241 MW Bitcoin Mine : Stablecoin Issuer Tether Is Among the Investors in the New Bitcoin Mining Site Powered by Solar and Wind Energy in El Salvador

Binance Gives Rising Star Teng Key Position to Replace CEO Zhao in Largest Cryptocurrency Exchange : Former regulator Richard Teng is expanding his role to oversee regional markets outside of the U.S. to show Binance as “a new organization.”

Sam Reynolds and James Rubin edited the book.