Cryptocurrency markets have been trading within an unusually tight 5% range since March 17 as conflicting forces continue to pressure the sector. Consequently, in the past 7 days, the total market capitalization gained 3.8%, which was driven mainly by Bitcoin’s (BTC) 3.6% price increase and Ether’s (ETH) 5% gain.
On March 27, the Commodity Futures Trading Commission sued Binance and Changpeng “CZ” Zhao for allegedly violating trading and derivatives rules, heightening regulatory uncertainty. According to the lawsuit, Binance provided access to leverage for customers trading on the spot and futures markets.
The announcement came just five days after Coinbase received a Wells Notice from the U.S. Securities and Exchange Commission (SEC), which could target the exchange’s staking program, listed digital assets, wallet and Coinbase Prime services.
Similar actions occurred outside the U.S., after Japan’s Financial Services Agency (FSA) March 31 announcement that several foreign cryptocurrency exchanges, including Binance, Bybit, MEXC Global and Bitget had been operating in the country without proper registration, in violation of the country’s laws.
The lateralization trend that began in mid-March has repeatedly tested the crypto market’s $1.14 trillion market capitalization support. The movement suggests that investors are hesitant to place new bets until more information on the lawsuits against Binance and Coinbase is available.
Risk markets benefited from the inflationary pressure
The global banking crisis forced the Federal Reserve to use two different emergency lending programs. As a result, the Swiss National Bank provided more than $100 billion in liquidity to absorb the impact of Credit Suisse and its subsequent sale to UBS. Stocks and commodities have benefited as traditional finance investors seek alternatives to protect against inflation.
Stocks and commodities have benefited as traditional finance investors seek alternatives to protect against inflation. Since March 15, the S&P 500 index has risen 6.6%, gold has risen 4.6%, and oil prices have gained 18.6%. As a result, there are compelling arguments for both an upward and downward trend within the lateral channel which currently limits crypto’s total capitalization at $1.2 trillion.
Derivatives show mixed trends, but no use of excessive leverage
Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged…
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