As the SEC Declares War on Binance and Its CEO Changpeng Zhao, Bitcoin Is Trading More Like Gold Than Ever Before

The inevitable has finally come to pass. The apex financial regulator in the US is officially going after the biggest crypto exchange in the world, hammering the price of Bitcoin and Ethereum in the process. However, in what bodes well for Bitcoin’s prospects, there are growing signs that the world’s premier cryptocurrency is shedding its risky asset characteristics and behaving more like gold these days.

As per the SEC’s press release, the apex US financial regulator has lobbed 13 charges against Binance and its CEO, Changpeng Zhao (CZ), alleging subversion of established rules to allow high-net-worth individuals in the US to access Binance’s offshore services. Other allegations include an insufficient separation between the main Binance platform and its American counterpart, as well as the intermingling of corporate and customer funds and assets.

Binance Ownership Structure

The SEC also believes that CZ and Binance deliberately employed manipulative tactics via CZ-owned entities such as Sigma Chain and Merit Peak Limited, with the former used to artificially inflate Binance’s trading volume and the latter used to funnel comingled corporate and client funds. Moreover, according to the SEC, an affiliate of Binance US – BAM Trading – misled investors about “non-existent trading controls” over the Binance US platform. The SEC further alleges that Binance and BAM Trading violated securities law by selling unregistered securities in the form of the BNB exchange token, the Binance USD (BUSD) stablecoin, staking-as-a-service program, and other crypto lending products.

Bear in mind that US CFTC has already sued Binance and Changpeng Zhao for violating financial regulations.

The result of this development is obvious. At the time of writing, Bitcoin is down nearly 5 percent and is trading at the $25,000 price handle.

Bitcoin hasn't been left behind in the tech stock rally, it is just trading more like gold than ever before.

2 months ago I highlighted the initial signs of this divergence. In last few months BTC/USD trading as correlated to Gold/USD as it had been trading to Nasdaq in '22: pic.twitter.com/mh7SGKhdks

— Bob Elliott (@BobEUnlimited) June 5, 2023

Meanwhile, as explained in the above tweet, Bitcoin’s correlation with the high-beta Nasdaq 100 index is decreasing. At the same time, the premier cryptocurrency’s correlation with gold is on the rise.

The above chart highlights this phenomenon in granular detail.

Do note that back in April, Bitcoin was 62 percent correlated with the Nasdaq 100 ETF, QQQ, and 30 percent correlated with gold. In recent days, Bitcoin’s correlation with gold has increased rapidly.

Do you think Bitcoin’s increasing correlation with gold will help in reducing the magnitude of the carnage that is expected to result from the SEC’s declaration of war on Binance? Let us know your thoughts in the comments section below.

Written by Rohail Saleem