Bitcoin Seesaws Around $27K as Investors Digest Binance-CFTC Lawsuit

The largest cryptocurrency by market capitalization has changed hands within a narrow range over the past 24 hours following the CFTC’s actionagainst Binance and CEO Changpeng Zhao.

AccessTimeIconMar 28, 2023 at 7:53 p.m. UTC
Updated Mar 28, 2023 at 7:58 p.m. UTC

Bitcoin (BTC) consolidated around $27,000 as investors continued to mull the potential impact of the U.S. Commodity Futures Trading Commission (CFTC) lawsuit against Binance and founder Changpeng Zhao over alleged regulatory violations including running an illegal exchange and a "sham" compliance program.

BTC was recently trading at about $27,225, up about 1% over the past 24 hours. The largest cryptocurrency by market capitalization dipped as low as $26,669 earlier in the day. BTC plunged from highs above $28,000 after the CFTC lawsuit was filed on Monday and has fallen 3% over the past week.

“Bitcoin is displaying such unbelievable resilience to what is happening around it, even in the crypto industry, that you have to wonder just how sustainable that can be,” Craig Erlam, senior market analyst at foreign exchange market maker Oanda, wrote in a Tuesday note. He added that the CFTC-Binance-triggered price drop “doesn't feel particularly significant.”

Investors are fretful about the potential impact of the CFTC suit against the world’s largest crypto exchange by trading volume, and increasing regulatory scrutiny that threatens to place some of the same restrictions on the industry as on traditional finance.

Meanwhile, Binance and the CFTC sparred in the aftermath of the filing. In a late Monday blog post, Binance CEO Changpeng Zhao called the lawsuit “an incomplete recitation of facts.” But in an appearance on CNBC on Tuesday, CFTC Chair Rostin Behnam said the CFTC action “seemed to be a pretty clear case of evasion and something that we needed to step in aggressively with and do it as quickly as possible.”

K33 Research’s research analysts also attributed the recent downside volatility to lingering effects of the Federal Open Market Committee (FOMC) 25 basis point interest rate hike last week and software provider MicroStrategy’s announcement on Monday that it had bought roughly $150 million more in bitcoin over the past five weeks and pre-paid the remaining principle on a loan from failed, crypto-focused Silvergate Bank. BTC fell 2% in the immediate aftermath.

“The adverse market reaction after a MicroStrategy announcement is typical,” K33's research analysts wrote in a note sent to its client Tuesday. “Market participants absorb the information that a known large buyer has finished, meaning less buy-side liquidity to support further upside.”

Ether (ETH), the second-largest cryptocurrency in market value, was recently changing hands at about $1,772, a nearly 4% gain. Crypto payment platform Ripple’s XRP token price jumped over 10% Tuesday to 52 cents, its highest level in five months.

The CoinDesk Market Index, which measures the overall crypto market performance, recently rose 1.6%.

Equity markets turned red Tuesday amid banking uncertainties, with the S&P 500 and tech-heavy Nasdaq trading down 0.4% and 0.8%, respectively. The Dow Jones Industrial Average (DJIA) was down 0.3%.

Edited by James Rubin.


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Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.

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