Earlier this week, some tokens were accused of being securities, leading to possible risk aversion among traders.
Days after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against cryptocurrency exchanges Binance and Coinbase alleging that 13 tokens were securities, tokens of major blockchain networks have fallen more than 20% in the past 24 hours.
Data shows that most of these losses occurred in the early hours of Saturday. Solana (SOL), Polygon (MATIC), and Cardano (ADA) dropped 25% in a matter of hours — leading some on Crypto Twitter to wonder if a large crypto fund sold their assets in fairly illiquid market conditions.
Such moves pushed the tokens’ weekly losses to 34%, the data showed.
As a result, major coins such as bnb (BNB), dogecoin (DOGE), xrp (XRP) fell by more than 11%. Bitcoin (BTC) fell by 3.6%, while Ethereum (ETH) fell by 4.5%.
Liquidations in crypto-tracking futures approached $300 million in the early hours of Saturday, Coinglass data showed, surpassing the previous nine-month record set earlier this week.
Cryptocurrency liquidation refers to the process of forcibly closing a trader's position in the cryptocurrency market. This occurs when a trader's margin account can no longer support their open positions due to significant losses or lack of sufficient margin to meet maintenance requirements.
Earlier this week, the SEC identified tokens issued by foundations and companies or associated with Polygon (MATIC), Sandbox (SAND), Filecoin (FIL), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer Protocol (ICP), Near (NEAR), Voyager (VGX), Dash (DASH), and Nexo (NEXO) as securities.
This has led to some major retail trading channels such as Robinhood ending support for tokens ADA, SOL, and MATIC, likely in response to the regulatory filing.