MATIC is currently facing increased uncertainty as it has been officially classified as a security by the US Securities and Exchange Commission, as revealed in the recent filing against Binance.
Consequently, the Polygon blockchain token experienced a significant drop of 31% within a week, setting a new record. However, there is some positive news as it has managed to recover, witnessing a promising rebound of over 11% in the last 24 hours.
L2 coins will be the next bullrun coins. Already knew, already confirmed.$SOL $ADA $MATIC and others L1’s got the security stamp. Regulation will kick hard = tight choice of L1/L2 coins. Where will all this money flow to? pic.twitter.com/jw5xpLRA4j
— Zoomer Oracle (@ZoomerOracle) June 5, 2023
MATIC is one of the 13 tokens within the Binance lawsuit to be designated as a security. Polygon Labs, the developer of MATIC, issued a statement on Twitter defending Polygon saying that the network is “developed outside the US, deployed outside the US, and focused to this day on the global community that supports the network.”
This recent lawsuit against Binance was followed up by the SEC’s lawsuit against Coinbase, citing that the company is operating an unregistered exchange in connection with the company’s staking service.
Fear, Uncertainty And Doubt In The Market
With the recent classification of several cryptocurrencies as securities, the market has slid considerably within the past week. Bitcoin, the top cryptocurrency, gained dominance in light of the recent regulatory fillings against Binance and Coinbase.
The other tokens in the list are SOL, ADA, FIL, ATOM, SAND, MANA, ALGO, and COTI. According to the lawsuit, the tokens are listed as investment contracts. This made the SEC label them as securities in accordance with the Howey Test, which is a test to know whether a certain asset is a security or not.
MATIC market cap at $5.8 billion. Chart: TradingView.com
This move by the SEC was in line with its recent actions against the crypto industry. Just this February, the regulatory body cracked down on Kraken’s staking service along with forcing the company to pay $30 million in penalties for the violations.
If the mentioned tokens and companies fail to comply with the SEC, it may lead to another Ripple-like event which will affect the market.
MATIC Bulls Should Watch This Level
At the time of writing, MATIC is being supported at the $0.6 price level which will act as the launch pad for future bullishness. However, external market forces still hold sway in the token’s momentum and price actions in the near future. The recent lawsuits already slashed millions upon millions of possible gains for investors.
Meanwhile, CoinGlass data shows MATIC long positions being liquidated as the market crashed after the lawsuits were made public.
Despite this, buying pressure after the crash continued with MATIC bulls holding $0.6 support. If they can hold on to this support level, we might be able to see a return towards the $0.83 support in the medium to long term.
Featured image from The Daily Hodl