The crypto market dropped sharply after the US Commodity Futures Trading Commission (CFTC) launched a probe into Kraken, Coinbase, itBit, and Bitstamp – the four major crypto exchanges. The Commission is supposed to investigate the trading data of these crypto exchanges.
The crypto market was in shock as all of the top-100 digital currencies as per the market capitalization were affected due to this probe. According to reports, the overall market capitalization plummeted by around $20 billion.
Major Cryptocurrencies Take A Nosedive
The largest cryptocurrency Bitcoin (BTC) was the least affected losing just a little less than 5% in the past 24 hours and was trading at $7,244. Ethereum (ETH) on the other hand, dipped below $600 mark losing around 6% in the past 24 hours and was trading at approximately $568. The overall market capitalization was at $320 billion with the market cap declining by more than $120 billion in past 30 days. It means the crypto market suffered a value loss of around 26%.
The most affected cryptocurrencies among the top-100 are IOTA (MIOTA), and EOS. MIOTA dipped by 10% and it is trading at $1.50. EOS lost 8% over the last 24 hours and is now trading at $13.12. Incidentally, the value of EOS went up at the start of June and the platform also released its EOSIO 1.0 software track at the same time.
What Prompted The Probe?
To understand why CFTC is investigating these major crypto exchanges it is important to know the working of CME and all these exchanges. CME Group has interests in multiple businesses and also has a crypto exchange in Chicago selling financial derivatives products including futures and options. In December last year, it started selling Bitcoin-based futures contract, which are the contracts that describe transactions stipulated for a future date. The launch of Bitcoin futures by CME was considered as a pioneering step by the industry experts and they expected that it will bring the digital currency into the mainstream.
Since CME did not get the expected support from the major crypto exchanges, it took help of a London-based exchange to calculate Bitcoin’s price, which triggered the suspicion of CFTC regarding possible manipulation in the price leading to an investigation.