Bitcoin’s recent decline of approximately 20% from its year-to-date high has prompted the need to take a broader view of the overall market. To gain a better understanding, we will analyze the performance of various tokens listed in the Coinbase and Binance lawsuits, both defending their positions in U.S. courts. The main point of contention revolves around the classification of these crypto assets as securities and whether they should fall under SEC regulation. This article will examine the performance of these tokens against Bitcoin over the past eight months and highlight the standout performers in dollar terms.
Let’s first consider the performance of this group of digital assets since the black swan event that preceded the lawsuits, namely the bankruptcy filing and subsequent collapse of FTX. In November 2023, when Bitcoin was valued at around $16,900, FTX filed for Chapter 11 bankruptcy. Since then, Bitcoin has surged approximately 140% against the dollar, with only two assets outperforming it. Solana and ICP saw increases in their price in Bitcoin terms, with gains of 116% and 9% respectively. However, other tokens listed as potential securities experienced declines ranging from -41% to -80%. Cardano displayed the least decline, losing 41% of its value against Bitcoin, while Chilliz suffered the most notable decline of -80%. In dollar terms, Cardano saw a 50% increase, while Chilliz witnessed a decline of -53%, highlighting Bitcoin’s strength over the past 15 months.
The SEC lawsuits against Binance and Coinbase, served within a day of each other in June, caused significant upheaval in the market. When Binance was served on June 5, Bitcoin experienced a momentary drop to $25,300 from approximately $26,800. However, when Coinbase was served, Bitcoin’s value quickly recovered before gradually declining to around $25,000. On June 20, 2023, BlackRock submitted an application for a spot in the Bitcoin ETF, leading to Bitcoin’s price surpassing $30,000. This momentum was interrupted by a stock market sell-off in August, which resulted in the reversal of the gains. Bitcoin then traded sideways until Grayscale’s victory in court against the SEC, triggering a surge towards its eventual two-year high of $49,000 on the day the spot Bitcoin ETFs were launched. At this peak, Bitcoin had risen by 90% since the lawsuits. While Bitcoin has retraced somewhat since then, it remains up by 47%. However, three assets managed to outperform Bitcoin during this period. Solana and ICP demonstrated impressive growth of 169% and 49% respectively, while Near Protocol also noted an 8% increase compared to Bitcoin. On the other hand, all other tokens categorized as potential securities witnessed declines against Bitcoin, with Dash experiencing the most significant decline of -56%. Cardano was the least affected, with a decrease of only -15%. In terms of dollar value, Solana, ICP, and Near Protocol showed considerable growth, with increases of 286%, 265%, and 145% respectively, over the same timeframe. Even Dash, which suffered the most against Bitcoin, managed to achieve a 4% increase, while Cardano recorded an 87% growth against the dollar.
It is crucial to avoid overlooking declines in Bitcoin terms when evaluating assets priced in dollars within the crypto industry. While ETFs have been the primary focus this year, Binance’s case was heard on January 22, while Coinbase appeared in court on January 17. The SEC aimed to establish that Binance’s BUSD stablecoin and BNB token should be classified as investment contracts. Binance challenged the relevance of the Howey test to cryptocurrencies and disputed the SEC’s comparisons with other court cases, including Zakinov v. Ripple Labs. Similarly, Coinbase contested the applicability of the Howey test to cryptocurrencies. The SEC’s broad approach raised concerns about expanding the definition of securities to include categories typically beyond its scope, such as collectibles. The presiding judges acknowledged the complexity of the matter, with Judge Failla expected to rule with a 70% chance of dismissing the SEC’s lawsuit against Coinbase. Nonetheless, a victory for the SEC in either case could significantly impact the cryptocurrency industry. It could mandate crypto exchanges to categorize digital tokens as securities, resulting in fundamental changes to how these assets are managed and regulated in the United States. The outcomes of these cases will set crucial precedents for the future regulation of digital assets in the country and will undoubtedly affect the tokens mentioned in the lawsuits filed against Coinbase and Binance.
The performance of leading tokens amidst the SEC lawsuits has revealed both winners and losers. Bitcoin has demonstrated its resilience, outperforming most assets despite the recent decline. Solana, ICP, and Near Protocol have emerged as strong contenders, exhibiting impressive growth in both Bitcoin and dollar terms. While tokens threatened with classification as securities have mostly shown declines, the severity varies among different assets. The rulings in the respective lawsuits against Coinbase and Binance will shape the regulatory landscape for digital assets in the United States and leave a lasting impact on the industry as a whole. It will be interesting to observe how these cases unfold and the subsequent implications for the market.