The US Commodity Futures Trading Commission's (CFTC) lawsuit against Binance appears to have resulted in a downturn for the cryptocurrency market. The net outflows of $40 billion over the last 24 hours caused the market cap to drop by 3.42%, standing at $1.12 trillion down from $1.16 trillion.
During this period, Bitcoin and Ethereum, which account for a significant portion of the crypto market capitalization fell by 4.25% and 2.75% respectively with their market caps dropping to $516.82 billion and $210.35 billion.
As per reports, other top cryptocurrencies also witnessed negative trends except for XRP that saw an increase in its value over this period.
The regulatory action taken against Binance is believed to have contributed significantly towards this decline as it has put bears (sellers) rather than bulls (buyers) in control of the crypto market pushing BTC below the crucial support level of $27k.
Binance faces allegations from CFTC over illegal trading activity on its platform involving derivatives such as futures contracts that are not registered with regulators as required under US law.
This development has led many experts to predict further volatility within the cryptocurrency industry until there is more clarity around regulations governing digital currencies.
It remains unclear how long these effects will last or whether they will trigger any significant changes within the industry going forward; however, investors remain concerned about short-term fluctuations impacting their portfolios.
The recent developments surrounding Binance and CFTC's lawsuit appear to be creating bearish sentiment across markets resulting in declines across various cryptocurrencies' values including Bitcoin and Ethereum among others except XRP which saw some gains during this time frame.
With regulatory bodies increasing scrutiny on digital currency exchanges globally amid rising concerns about money laundering risks and other illicit activities, the industry is likely to see more volatility in the coming days until there is clarity around regulations.