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Significant shifts have occurred in blockchain networks as they face a significant decrease in value, experiencing a startling drop of over a fifth within a 24-hour period. This decline is a result of the anxiety surrounding a potential risk-off event, following allegations by the US Securities and Exchange Commission (SEC) that 13 tokens function as securities. The legal battle involves cryptocurrency exchanges Binance and Coinbase.
The majority of these depreciations took place during the early hours of Saturday. Solana (SOL), Polygon (MATIC), and Cardano (ADA) were hit the hardest, plummeting by almost 26% within a few hours. Speculation within the Crypto Twitter community emerged, with discussions around the possibility of a significant cryptocurrency fund liquidating its assets due to limited market liquidity.
These substantial reductions have led to weekly losses of up to 35% for these tokens, causing a ripple effect on other heavyweight cryptocurrencies. Ripple (XRP), Binance Coin (BNB), and Dogecoin (DOGE) saw drops ranging from 11 to 13%. Even the top two cryptocurrencies by market cap, Bitcoin (BTC) and Ethereum (ETH), experienced a decline of 4% and 5% respectively.
Earlier in the week, the SEC identified a range of tokens issued by various foundations, firms, or associated with protocols, designating them as securities. Tokens such as Near (NEAR), Internet Computer (ICP), Polygon (MATIC), Flow (FLOW), Chiliz (CHZ), Axie Infinity (AXS), Filecoin (FIL), Sandbox (SAND), Voyager (VGX), Dash (DASH), and Nexo (NEXO) were among those flagged.
The aftermath of these legal actions has had an impact on major retail trading platforms, with Robinhood discontinuing support for tokens ADA, SOL, and MATIC. This precautionary measure is a response to the regulatory filings. The intricate relationship between cryptocurrencies and regulations continues to evolve and significantly impact the crypto market.
