Binance vs. SEC: Positive Turn for Crypto Markets?

The legal tussle between Binance, the major cryptocurrency exchange, and the U.S. Securities and Exchange Commission (SEC) saw an unexpected development on September 18.

Judge Zia M. Faruqui denied the SEC’s plea for access to Binance.US’s internal systems. Instead, he advised the SEC to draft more focused discovery queries. This interim decision only momentarily delays Binance’s obligation to clarify the distinction between Binance.US’s and Binance International’s custody solutions. However, Bitcoin’s price reacted favorably, soaring past the $27,000 resistance mark, its highest in three weeks.

Speculations are rife about whether this price surge is due to actual buying demand or leveraged bets.

Yahoo Finance reported that a subsequent hearing has been slated for October 12 by Judge Faruqui. Both parties are expected to provide a status update before this date. Though this could be viewed as a temporary impediment for the SEC, it may also escalate risks for Binance.

Binance’s CEO, Changpeng “CZ” Zhao, consistently claims that Binance.US never used Binance International’s custody solutions. However, recent documents from Binance.US hint otherwise. Yet, the SEC hasn’t provided definitive proof of Binance misleading the court.

While Binance’s data clarity remains ambiguous, Bitcoin’s market sentiment looks favorable until the next court session.

To discern the current mood among expert traders, it’s useful to study Bitcoin’s margin and derivative metrics.

Bitcoin’s Journey to $28,000: Market Indicators

Margin markets provide a lens into professional traders’ strategies as it allows them to amplify their exposure by borrowing stablecoins. Meanwhile, Bitcoin loans let traders speculate on a potential dip in crypto prices.

Recent metrics from OKX indicate a drop in its margin-lending ratio, indicating a decrease in leverage-driven long positions, albeit the prevailing sentiment remains bullish.

Market sentiment can also be deduced by evaluating the activity between call (buy) and put (sell) options. A shift in the put-to-call ratio for Bitcoin options from 1.50 towards a more neutral 1.04 on Sep. 20 suggests diminished interest in protective puts.

Since September 18, the Bitcoin options volume has either been neutral or marginally tilted towards put options. This insinuates that the surge past the $27,000 mark took many professional traders by surprise.

Both margin and options markets reveal a parity in demand between long and short positions, suggesting limited use of excessive leverage during Bitcoin’s recent rally. Even as Bitcoin touched a three-week high, the enthusiasm from buyers in these markets remained tepid. However, buying trends indicate potential accumulation by significant players or “whales.”

For now, Bitcoin enthusiasts have a breather until October 12, when further decisions about Binance.US could be made. Meanwhile, a Bitcoin rally beyond $28,000 seems plausible.