After the market experienced selling pressure yesterday and the day before as a result of the SEC litigation against the two major exchanges, Coinbase and Binance, XRP, Dogecoin, and numerous other cryptocurrencies are reporting a comeback.
The surprising news that Binance and its CEO, Changpeng “CZ” Zhao, had been sued by the US Securities and Exchange Commission (SEC) hit the crypto community on Monday.
Tuesday saw the SEC announcing a second action against Coinbase, a competitor of Binance, and later that day asking a federal judge to issue a temporary restraining order to freeze Binance assets.US.
Surprisingly, the cryptocurrency market, driven by Bitcoin, recovered from the SEC’s enforcement action to report gains at the time of writing.
XRP, the sixth-largest cryptocurrency by market capitalization, also increased by 5%, but it subsequently appeared to have lost part of those gains. It has now increased by 3.65% to $0.528 in the previous day.
The biggest cryptocurrency by market capitalization, Bitcoin (BTC), is presently up 3.4% on the day and trading at $26,646. It has nearly entirely recovered from yesterday’s losses.
Likely reason for surprising rebound
According to on-chain analytics company Santiment, the unexpected rally may have been caused by contrarian traders profiting from negative market sentiment. It mentions that prices started to soar right after the crowd gave up.
“As crypto prices crashed yesterday, there was an increase in crowd buy-the-dip enthusiasm, but it was only after the crowd gave up that prices started to skyrocket. Contrarian traders typically benefit from avoiding the popular hoopla, according to Santiment experts.
Whether or whether what we are observing is a dead cat bounce or signs of a robust market unaffected by the status quo are not yet obvious.
At the time this article was written, certain cryptocurrencies were losing ground while others had already gone negative.
