Bitcoin price down today, why?
The surge in Bitcoin (BTC) price that took it to a high of over $30,000 on April 11 has dissipated due to a fresh wave of regulatory enforcement against blockchain, led by the SEC, following the lawsuit against Binance exchange on June 5.
The decline in Bitcoin price is part of a market-wide slump, and analysts are concerned that BTC might hit new lows for the year.
Let’s take a closer look at the factors affecting Bitcoin price today.
US-led regulatory pressure against crypto intensifies
On June 5 and 6, the US Securities and Exchange Commission (SEC) filed civil lawsuits against two of the biggest centralized exchanges in the crypto world, Binance and blockchain. The SEC has identified around 61 different cryptocurrencies, worth $100 billion, as securities. In addition to this, blockchain was issued a Show Cause Order by a coalition of 10 US states, citing violations of securities law.
- ETH price is up today, why?
- US Representatives want crypto tax rules, Atomic Wallet hack linked to N.Korean hackers, OKX partners with Komainu, Zodia Custody teams up with Blockdaemon.
- SEC’s Gensler says US doesn’t need digital currency due to the dollar.
While Bitcoin has previously been deemed not to be a security by the SEC, some market analysts are considering if the recent surge in actions is a renewed attempt for the Operation Chokepoint 2.0 initiative, which aims to limit access to all digital currencies. These enforcement measures have led some Bitcoin bulls to speculate if the crypto market and BTC have reached their bottom yet.
The increase in regulatory scrutiny in the US has caused a shift in BTC supply by region. While the US dominated Bitcoin’s supply in 2020 and 2021, the trend has since reversed and has dropped by 11% since mid-2022.
Related: Bitcoin is on a collision course with ‘Net Zero’ promises
Bitcoin futures liquidations reach 3-month high after SEC enforcement
Over $106 million in Bitcoin longs were liquidated on June 5. When BTC longs are liquidated without buy pressure from trading volume, Bitcoin price is negatively impacted.
The rush of liquidations and absence of new volume has led the Fear and Greed Index, a key investor sentiment gauge, to return to “fear” levels. In the face of high long liquidations, the positive deposits of exchange netflow may show that greater Bitcoin selling pressure is on the horizon.
Can Bitcoin price reverse course?
The short-term uncertainties in the crypto market have not appeared to change the long-term outlook of institutional investors. Despite a hostile US regulatory environment, Cboe Digital, a major options exchange in the US, has had its application to offer margined futures contracts for Bitcoin approved by the US commodities regulator. The Cboe Digital approval will help increase Bitcoin exposure among institutional investors.
Related: Bitcoin price will get ‘another test’ of 200-week trend line – analyst
Bitcoin price continues to be directly impacted by macroeconomic events, and it is also likely that further regulatory actions will continue having some effect on BTC price.
In the long term, market participants still expect the price of Bitcoin to recover, especially as more financial institutions seem to be embracing BTC.
