Why Isn’t Bitcoin Falling More? Cryptos Are Acting More Like Commodities Than Securities

Oil is Oil, Gold is Gold, Bitcoin is Bitcoin. The market reaction to SEC enforcement is mild compared to historic price action after other tumultuous events in the crypto industry.

AccessTimeIconJun 6, 2023 at 8:01 p.m. UTC
Updated Jun 9, 2023 at 3:50 p.m. UTC

While the Securities Exchange Commission (SEC) wants to characterize many crypto assets as securities, the market appears to have a different idea, treating them like commodities.

We’ve reached day two of what appears to be SEC Enforcement Week with the agency filing suits against Binance and Coinbase on successive days.

Both suits are significantly affecting the exchanges, with net transfer volume declining significantly on Binance, and COIN opening the U.S. trading day 20% lower than the prior day’s close.

Meanwhile, bitcoin and ether are up 5% and 4%, respectively, over the past 24 hours. Bitcoin’s 5.4% contraction on Monday, doesn’t even rank within the top 50 largest one-day declines since 2021.

And of the 13 altcoins that the suits named as securities, none have declined more than 3%, with several actually trading higher during the day.

Despite the SEC’s assertion that many cryptocurrencies are securities, the market appears to be voting otherwise.

Additionally, SEC actions toward crypto may actually be highlighting the importance of digital assets in the minds of crypto holders.

Decoupling from crypto organizations?

Bitcoin and ether have recently decoupled from traditional financial indexes like the S&P 500, and now they also appear to be decoupling from crypto organizations themselves. Their separate path from Coinbase's share price aligns more with physical commodities.

The price of crude oil wouldn’t sharply drop simply because the SEC sued ExxonMobil. Nor would the price of Gold plummet if the agency took action against the CEO of Barrick Gold.

Oil is oil, gold is gold – both immutable, ever present and largely unaffected by daily events. Bitcoin, ether, and other assets appear to be operating under a similar rationale.

Much like in the physical commodity space, the greater impact to digital asset prices has been supply (i.e. the reduction in ether supply since September) and demand (i.e. macroeconomic factors impacting consumption).

Bitcoin and ether not falling sharply following enforcement actions against vehicles of distribution (i.e. exchanges), counters the narrative that cryptocurrencies operate under a “greater fool” theory that holds you can make money off an overvalued asset. Instead, investors appear to believe that crypto’s brightest future lies ahead.

At the moment, crypto markets seem to be saying the following…

  1. Yes…regulators can take action against Coinbase and Binance.
  2. But the asset itself continues to hold value.

Coinbase and Binance are separate entities. Bitcoin is bitcoin and ether is ether, and unless all distribution methods are completely eliminated, then markets appear willing to continue ascribing value to them.

Moreover, investors would likely consider any attempt to do so as the type of overreach that caused many of them to see digital assets as valuable to begin with.

BTC 06/06/23 (CoinDesk Indices)

Edited by James Rubin.


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Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX