A significant regulatory action
Yesterday, high-profile figures including Janet Yellen and Rostin Benham addressed the public regarding a major enforcement action against Binance, the world’s largest cryptocurrency exchange. The US Justice Department, Treasury, and CFTC jointly announced that Binance was fined over $4 billion, and its CEO Changpeng Zhao was compelled to resign and will face legal consequences.
Crypto market shows resilience
While such news would typically lead to a significant drop in the crypto market, Bitcoin only experienced a 4.5% decline. Other top cryptocurrencies also saw some decrease but not to the extent of a catastrophic fall that occasionally occurs in the crypto space.
The announcement was made on Tuesday evening, and by Wednesday morning, the market had already started to rebound. Bitcoin briefly dropped to $35,600 but has since risen to over $36,700.
Ethereum has already surpassed its pre-announcement price and seems to be breaking out as it climbs above the crucial $2,000 level.
Potential risks ahead
The one potential concern for this recovery is the Total3 market cap of all cryptocurrencies excluding Bitcoin and Ethereum. The chart indicates a confirmation of the head and shoulders pattern, suggesting a possible retracement to a total market cap of $368 billion, an 8% decline from the current level. However, if there is an upside breakout from the neckline, it would be highly bullish. Traders should exercise caution in their decision-making.
Hot Take: Crypto Remains Resilient Despite Regulatory Action
The recent enforcement action against Binance and its CEO Changpeng Zhao by US regulatory bodies has led to significant fines and legal consequences. However, despite this news, the crypto market has shown resilience. Bitcoin experienced a minor drop and has already started to recover, while Ethereum has surpassed its pre-announcement price. Nevertheless, traders should be cautious as there is a potential downside risk indicated by the Total3 market cap chart. The altcoins could retrace if the head and shoulders pattern plays out, but an upside breakout would be highly bullish.
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