Synopsis
- Lawsuits by the SEC against Coinbase and Binance are causing uncertainty in the crypto market. Their outcomes could significantly impact future crypto regulations.
- The expectation from the Federal Reserve meeting that will happen this Wednesday is to keep the interest rates unchanged.
- As the EU and Australia are increasing crypto regulations, the global outlook for crypto is becoming less optimistic.
- Positive news might come from the Middle East, as Saudi Arabia’s sovereign wealth fund could potentially invest in cryptocurrencies.
Key Observations
The total market capitalization faced the brunt of the macroeconomic events, revolving below the $1.03 Trillion mark. Over the coming week, we can expect the market to remain in a range-bound momentum.
Analysis
SEC’s Actions Against Coinbase and Binance
Coinbase: The SEC has sued Coinbase, accusing the platform of violating federal securities laws. The lawsuit specifically focuses on Coinbase’s staking program. The fallout of this legal battle is causing considerable distress in the market, with Coinbase’s stock price dropping by over 20% and its bonds tumbling into distressed territory.
However, some investors, like Ark Invest, are still bullish on Coinbase, buying more of its shares post-lawsuit. They believe in Coinbase’s capacity to innovate and navigate the uncertain regulatory environment.
Binance: In a similar vein, the SEC has sued Binance for operating illegally in the United States, alleging failure to register as a securities exchange. Binance faces 13 charges, including unregistered offers and sales of specific tokens, along with allegations related to its staking program and its platform Binance.com.
This has caused shockwaves through the industry, with the possibility of severe penalties for Binance and implications for other exchanges.
As a consequence of these events, Robinhood, another popular trading platform, will end support for Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27th. These were the three tokens that were named as securities in the recent Securities and Exchange Commission (SEC) lawsuits against Binance and Coinbase.
What to make of these events?
- Immediate uncertainties should be viewed as temporary fluctuations in a larger upward trend, as market volatility is a common aspect of investing.
- Periods of instability can challenge us, but focusing on the long-term outlook is crucial. Market downturns are often followed by recoveries.
- History has repeatedly demonstrated that those investors who remain patient during turbulent times are often the ones who reap significant rewards.
- This is not a time for impulsive decisions but for composure and patience in investment strategy.
- The crypto industry, like any other, is resilient and will adapt and strengthen from these experiences, often leading to portfolio growth opportunities.
- Moreover, positive regulations are a step in the right direction for the ecosystem.
Federal Reserve Meeting: The Federal Reserve’s upcoming meeting this Wednesday is a significant event that investors are eyeing. There’s a possibility of another rate hike, especially if Tuesday’s U.S. Consumer Price Index (CPI) data shows high inflation. Annual CPI was 4.2% in May as compared to 4.9% in April.
A rate hike could tighten liquidity in the markets, leading to potential downward pressure on cryptocurrency prices.
Potential White Swan from the Middle East: Despite the global regulatory uncertainty, potential positive news could come from the Middle East. Saudi Arabia’s sovereign wealth fund, with a fund size close to $650 Billion, might consider crypto investments as part of its diversification strategy, providing some optimism for the crypto industry.
Deep Dive into the Top Gainer and Loser
We closely analyze the performance of the top 50 coins by market capitalization, and take a closer look at the best and the worst performers of the week.
Top gainer of the week: Ripple (XRP) up by 6.04% ⬆️
Ripple, or XRP, has been on the rise this week, largely bolstered by the sentiment that it may finally triumph in its ongoing legal battle with the SEC.
Opinion
Fundamental analysis: Ripple’s performance outshines most coins in the market due to optimistic outlooks surrounding its SEC case. The belief that a victory is within reach has fostered strong support among investors.
Technical analysis: A closer look at XRP’s daily chart reveals an inverse Head and Shoulders Pattern, with a breakout measured move to $0.70, contingent on maintaining support above $0.53. The asset is moving above liquidity, and the price has broken above the 50EMA on the 4H timeframe. The RSI chart indicates bullish movements on multiple timeframes (4H, 1H, and 30m).
There is a significant resistance level at $0.56. If the bulls can overcome this, the XRP/USDT pair could rally towards $0.65. Nevertheless, a dip below the 20-day EMA ($0.50) could indicate weakening bullish control, potentially leading to a slump towards the 50-day SMA ($0.47).
Oscillator indicators: 2 bearish, 8 neutral, 1 bullish
Moving Average indicators: 3 bearish, 1 neutral, 11 bullish
Biggest loser of the week: ApeCoin (APE) down by 29.6% ⬇️
ApeCoin, an ERC-20 governance and utility token, is a part of the APE Ecosystem. The ecosystem is at the forefront of web3, promoting decentralized community development.
Opinion
Fundamental analysis: The ApeCoin community remains dedicated despite a downturn in the token’s performance. However, recent high-volume sell-offs signal a bearish turn in the market sentiment.
Technical analysis: The price trend is showing signs of resistance. If the price cannot stabilize above the daily support line and breaches and consolidates below it, there may be a further drop in value. The bearish trend is further reinforced by the high sell-off volumes witnessed recently.
Oscillator indicators: 1 bearish, 6 neutral, 4 bullish
Moving Average indicators: 13 bearish, 1 neutral, 1 bullish
In conclusion, while Ripple (XRP) has shown bullish momentum, market participants should monitor resistance levels and adjust their strategies accordingly. ApeCoin (APE) holders need to exercise caution as the coin may continue its downward trend.
