Bitcoin Drops to $29K Amid Binance Story, China Woes; XRP, SOL Lead Altcoin Slump

Regulatory uncertainty surrounding Binance, the largest crypto exchange, tends to weigh on crypto prices.

AccessTimeIconJul 24, 2023 at 2:01 p.m. UTC
Updated Jul 24, 2023 at 8:21 p.m. UTC
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Bitcoin (BTC) briefly dipped below $29,000 Monday for the first time in more than a month after the Wall Street Journal said Binance CEO Changpeng "CZ" Zhao suggested in a private conversation that the crypto exchange's affiliates had conducted wash trading several years ago, and China's policymakers warned of a tortuous economic recovery while falling short of announcing large-scale stimulus.

The top cryptocurrency by market value fell more than 2.5% to around $29,000 between 9:30 UTC and 10:00 UTC shortly after the Wall Street Journal published its report, and dipped to as low as $28,872 later during the day, CoinDesk data show. Then, BTC recovered and changed hands at around $29,100.

Major alternative cryptocurrencies — altcoins — also dropped through the day, with Ripple's XRP and Solana's SOL leading the fall. SOL plummeted 6.8% over the last 24 hours, while XRP declined 6.2%.

Ether (ETH), the second largest crypto asset by market capitalization, fell 2.1% over the same period and traded at around $1,840.

Popular dog-themed memecoin dogecoin (DOGE) defied the struggles of the broader cryptocurrency market, jumping as much as 5% before paring some of the gains, CoinDesk reported. Elon Musk-owned social media platform Twitter started to rebrand Monday to X, part of Musk's artificial intelligence (AI) firm X.AI, while Musk added DOGE to his bio, prompting speculation about the token's role in the platform's future.

Worldcoin, the crypto project of Sam Altman, founder of ChatGPT-developer OpenAI, went live Monday with its mainnet launch. Its native token WLD gained some 38% until press time as major exchanges enabled trading with the asset. The CoinDesk Market Index, which tracks the performance of a basket of digital assets, was down near 3% in a day.

Cryptos' stodgy performance veered from major U.S. equity indexes, which rose on Monday, with the tech-heavy Nasdaq Composite and S&P 500, which has a hefty technology component, edging up 0.1% and 0.4%, respectively. The Dow Jones Industrial Average climbed 0.5% to continue its longest winning streak in six years. Digital assets and stocks have increasingly decoupled this year after largely correlating previously.

Report on Binance.US issues

The WSJ published a report Monday saying Zhao said in an internal message that the exchange's affiliates may have been responsible for trading $70,000 worth of bitcoin on Binance.US' debut in 2019.

"That was ourself, I think," Zhao said in an internal message, according to the Journal. Wash trading refers the process of artificially inflating transaction volumes by trading with yourself or an affiliated entity.

Early last month, the U.S. Securities and Exchange Commission (SEC) filed a wide-ranging lawsuit against Binance for violating securities law and alleging that it used Sigma Chain, a company headed by CZ, to manipulate the volume. The U.S. banned wash trading in traditional markets in 1936.

A spokeswoman for Binance, which was founded by Zhao, told the newspaper that neither the company nor Zhao has engaged in or tolerated wash trading. Binance dismissed wash trading allegations in an email to CoinDesk.

“Binance does not engage in or tolerate wash trading, which is a violation of our terms of use, nor has it ever done so. Binance has a dedicated Market Surveillance team that is responsible for reviewing surveillance related to potential abusive and/or manipulative behavior including wash trades and trade price manipulation. The Market Surveillance team utilizes surveillance models and a team of experienced surveillance professionals to detect and prevent market abuse," Binance's spokesperson said.

The WSJ's report also said Binance's representative dismissed the SEC's charge as unfounded. Binance is the world's largest cryptocurrency exchange by trading volume. Thus, regulatory uncertainty surrounding Binance tends to weigh on crypto prices.

China's economic woes

Around the same time, China's ruling Communist Party's 24-member Politburo — its top decision-making body, led by President Xi Jinping – said the country's economy is facing new difficulties and the economic recovery will be challenging. Early this year, analysts widely cited China's reopening of its economy as a major bullish tailwind for risk assets, including cryptocurrencies.

Importantly, Politburo's readout published by the official Xinhua News Agency did not include large-scale fiscal and monetary stimulus announcements.

China faces several issues ranging from weak consumer spending after an early boost following the reversal of covid lockdown measures, deepening deflation in factory-gate prices, and housing and real estate problems. As such, markets have been expecting a strong monetary or fiscal response from Beijing.

Bitcoin, often considered a pure play on fiat liquidity and the riskiest of the risk assets, likely fell on the back of China's growth concerns and the absence of major stimulus hints.

BTC eyes $27,000

The lack of positive catalysts in the short-term and usually muted summertime trading activity could result in a BTC price decline, analysts told CoinDesk.

“If bearish pressure intensifies, the next significant support level would be $27,000, the lower boundary of the rising channel from the November lows and the 200-week moving average,” Alex Kuptsikevich, FxPro senior market analyst, noted in an email.

“Bitcoin is beating a slow retreat at the moment as the price continues to trend down from recent highs," said Simon Peters, markets analyst at digital brokerage platform eToro. "Although market dynamic in summer months can tend toward volatility with lower trading flows, the recent period has been remarkably calm for top crypto assets in the market.”

UPDATE (Jul. 24, 14:31 UTC): Adds Binance's response.

UPDATE (Jul. 24, 17:56 UTC): Updates prices, adds price action of smaller tokens and adds analyst comments.

UPDATE (July 24, 21:18 UTC): Adds U.S. equity indexes' closing performance.

Edited by Sheldon Reback.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

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