Bitcoin loses $28,000 after the Fed and SEC action on Coinbase

There´s been a downward turn for cryptocurrencies. Bitcoin (BTC) drops 1.5% in the last 24 hours and loses $28,000, while Ethereum (ETH) retreats more than 2% and heads towards $1,750.

The Federal Reserve (Fed) interest rate decision marked yesterday's trading day, with Bitcoin and Ethereum managing to barely hold $28,000 and $1,800 after the central bank hit the brakes. Chairman Jerome Powell not only communicated that the hike would be lower than anticipated before the banking crisis, about 25 basis points, but anticipated that only one more hike would be needed to get to the terminal rate they have placed at 5.1%.

"The process of bringing inflation back to 2% still has a long way to go. We believe that events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which in turn would affect economic performance. It is too early to determine the extent of these effects and, therefore, too early to determine how monetary policy should respond," Powell stressed.

"Risk aversion was able to drag down Bitcoin as market jitters returned on banking worries and over a quickly weakening economy. The Fed might be done tightening, but the risk of something else breaking in the financial sector remains elevated," explained Edward Moya, senior analyst at Oanda.

However, although the outcome was as expected, there has been one factor that has dashed hopes that Bitcoin would test $30,000 this week: the Securities and Exchange Commission's (SEC) legal move against Coinbase, one of the world's largest crypto exchanges. A lawsuit has also been filed against Justin Sun, founder of Tron, for allegedly selling and launching unregistered securities, fraud and market manipulation.

The U.S.-based exchange received a Wells notice informing it that the regulator is considering legal action against the company for violation of federal securities laws. "“We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so. Today’s Wells notice also comes after Coinbase provided multiple proposals to the SEC about registration over the course of months, all of which the SEC ultimately refused to respond to," they criticized from the company.

Following this announcement, the price of digital assets fell eagerly, as well as Coinbase shares, which have come to plummet by over 15% after the close. Ripple (XRP) drops 1.3%, while Polygon (MATIC) falls 1.6% and Solana (SOL) retreats more than 2%.