The bullish momentum that propelled Bitcoin (BTC) price to a 2023 high over $30,000 on April 11 is all but gone after a fresh wave of SEC-led regulatory enforcement against Coinbase followed the June 5 lawsuit against Binance exchange.
The contraction in Bitcoin price follows a market-wide decline, and analysts fear that BTC might be headed to new year-to-date lows.
Let’s take a closer look at the factors impacting Bitcoin price today.
US-led regulatory pressure against crypto intensifies
On June 5 and June 6, the United States Securities and Exchange Commission filed civil lawsuits against two of the largest centralized exchanges in crypto, Binance and Coinbase. The SEC has noted around 61 different cryptos, representing $100 billion in value, that are securities. Separately, Coinbase was hit with a Show Cause Order by a coalition of 10 U.S. states. Like the SEC lawsuits, the claim is that Coinbase was violating securities law.
While the SEC has previously noted Bitcoin is not a security, some market analysts are weighing if the current increase in actions is a renewed attempt for the Operation Chokepoint 2.0 initiative which aims to restrict access to all digital currencies. The enforcement actions are leading some Bitcoin bulls to wonder if the crypto market and BTC have bottomed yet.
The increase in regulatory scrutiny in the U.S. has caused a shift in BTC supply by region. While the U.S. dominated Bitcoin’s supply in 2020 and 2021, the trend has reversed and has fallen 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
On June 5, over $106 million in Bitcoin longs were liquidated. When BTC longs are liquidated without buy pressure from trading volume, Bitcoin price is negatively affected.
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 do not appear to have changed institutional investors’ long-term outlook. Recently, despite a hostile U.S. regulatory environment, Cboe Digital, a major options exchange in the United States, has had its application to offer margined futures contracts for Bitcoin approved by the United States 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 are seemingly embracing BTC.
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