The impact of the SEC appears to be just beginning as the tokens faced their first-ever “withdrawal” from a crypto exchange. The impact was extremely high as the prices of Cardano, Polygon and Solana fell sharply dragging the entire crypto space down. Moreover, altcoins could continue to be downed and maintain a downtrend ahead. Also, Bitcoin dominance marks a 2-year high that may differ for a long time from the Altseason.
The main reason for the current discharge is said to be that Robihood delisted Solana, Polygon, and Cardano. These three altcoins are among the tokens with good fundamentals, and as a result, mistrust of these tokens has caused huge FUD in the markets, as market participants assume that more tokens will soon be delisted. . Additionally, volume is at multi-year lows and therefore selling pressure may deteriorate.
Therefore, if the cryptos listed by the SEC as securities turn out to be accurate, then they must submit their entire data to the US government. In the event that the SEC wins, then either of the scenarios can occur,
- Crypto companies can register with the SEC and provide all the information. They can also work as a registered company, which will be difficult for existing project models.
- Crypto companies may leave the United States, which may prevent US residents from managing these assets. This may force companies out of the US market, causing a liquidity crunch in trading and funding for venture capitalists.
The second scenario seems more likely, as the impacts have already been observed. Market markers exit the market, US exchanges withdraw cryptos, and VCs do not fund new or existing projects.
Currently, trading volume is at multi-year lows, which may further increase volatility. Also, with that, $1.3 billion could be poured into the open market, which is huge. Also, the majority of altcoins have less than $100 million in daily trading volume. Therefore, the FUD around the crypto is very high after the SEC lawsuit against Binance which is currently acting as fuel on the fire.