The SEC’s attack did not hurt Bitcoin’s price

The SEC’s attack on crypto exchanges failed to sink the price of Bitcoin.

This is what emerges from the latest Bitfinex Alpha report, which analyzed both the overall situation in the crypto market, as well as traditional markets and macroeconomic conditions. 

The SEC attack and the price of Bitcoin

The attack by the US government agency that oversees the securities market (the SEC) was not aimed at Bitcoin, but only at certain cryptocurrencies that are considered unregistered securities, and especially at the exchanges that trade them. 

In particular, it has affected the world’s largest crypto exchange, Binance, and the largest US crypto exchange, Coinbase. 

For some time now, speculation has begun to circulate that this attack is aimed precisely at downsizing the role of crypto exchanges, or even driving them out of the market. 

On the one hand, they are financial platforms that are not fully regulated in the US due to a regulatory gap that will not be closed any time soon. 

So they operate in an industry that is partly deregulated, but still has to comply with generic financial market regulations. This makes them easy targets at the regulatory level. 

On the other hand, they are new entrants who are dominating a market that has now grown to an interesting size, and more importantly may grow further in the future. 

The assumption that has been making the rounds lately is that large traditional financial players, such as BlackRock or Fidelity, for example, want to enter the crypto market to take a leading role, and obviously the largest slice of the market. 

To do so they need to undermine the currently dominant players, namely crypto exchanges, and the regulatory issue plays very much in their favor. 

The SEC, perhaps unintentionally, is lending them a hand, as it attacks crypto exchanges on the very side on which they are most exposed. 

The consequences of the SEC’s actions on the price of Bitcoin

The SEC’s attack began several months ago but only intensified in late May. 

In fact, shortly after mid-March the 2023 uptrend in Bitcoin‘s price seemed to be halted.

It started the year at $16,600, then rose above $27,000 on 17 March. But since then it has begun a long phase of lateralization around this level, though in mid-April it tried to move back above $30,000. 

That attempt at first seemed successful, but within a few days the price was back below that figure. 

The main problem occurred during May, and in the first half of June. 

In May the price of BTC fell from $29,000 to $26,600, completely rolling back April’s failed attempt to get back above $30,000, and bringing it fully back within the lateral range around $27,000. 

However, in the first half of June the decline continued, probably also due to the intensifying SEC attack on the crypto markets. 

The lowest monthly peak was reached just below $25,000 on 15 June. 

The market rebound

However, the SEC attack was not aimed at Bitcoin, but at crypto exchanges and some altcoins. 

In fact, as soon as it was able, Bitcoin’s price began a rebound that is still ongoing.

In the past six days it has recovered nearly 18%, and while such growth is not much for a volatile asset like BTC, it still appears quite important precisely because it is a reaction to last weeks’ decline due to the SEC attack. 

It is worth noting that during the same period, Ethereum recovered 11%, such that Bitcoin’s dominance, according to TradingView data, rose from 49% to 51%. 

The very dominance clearly reveals that Bitcoin is the unchallenged protagonist of the crypto markets at this time. 

It is enough to think that in January it had fallen as low as 41%, and by September last year it had also fallen below 39%. 

By January 2023 it had climbed back above the 44% mark, and in March above 47%. 

From 7 June until today it has gone from 47% to 51% in just two weeks, and since this is a parameter that moves very slowly, unlike price, such a movement is particularly significant. 

The Bitfinex report

The latest Bitfinex Alpha report reveals that the crypto market as a whole actually remained relatively stable even during the months of the SEC attack. Then again, it is a volatile market, so volatility is the norm and not the exception. 

The fact that the medium-term support of $25,000 has basically held up reveals that the situation is much less critical than it might appear by analyzing only the price action of the past few months. 

So while the situation for crypto exchanges, and for some in particular, continues to be difficult, it does not appear to be so for crypto markets in general. 

It is enough to consider that the current overall capitalization of the crypto market is right in line with what it was in early June, mid-May, or mid-March. And it is still 42% higher than it was at the beginning of the year.